Define inflation. What are the different methods of measuring inflation and what are the effects of inflation.

                                                                                                                            

MBA

Business Environment

ASSIGNMENT

 

Course Code: MMPC-003

Assignment Code: MMPC-003/TMA/JULY/2022 

Coverage : All Blocks

1. Define inflation. What are the different methods of measuring inflation and what are the effects of inflation.

Inflation is defined as the rate at which the general level of prices of goods and services in an economy is increasing over a certain period of time. In other words, it is the decrease in purchasing power of a currency over time due to the increase in prices. The effects of inflation can be both positive and negative, depending on the rate of inflation and the state of the economy. The different methods of measuring inflation include the Consumer Price Index (CPI), Producer Price Index (PPI), and Gross Domestic Product (GDP) Deflator. 

The CPI measures the price changes of a basket of goods and services that are commonly consumed by households, such as food, housing, clothing, transportation, and medical care. The PPI measures the average change over time in the selling prices received by domestic producers for their goods and services. The GDP Deflator measures the price changes of all the goods and services that are produced within an economy, including those consumed by households, government, and businesses.

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