Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
 | | Inflation | | Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Central banks attempt to limit inflation — and avoid deflation — in order to keep the economy running smoothly. | | Breaking it Down: | | As a result of inflation, the purchasing power of a unit of currency falls. For example, if the inflation rate is 2 percent... | | Read More » | | Inflation Accounting | | Inflation accounting is a special accounting technique used during periods of high inflation whereby statements are adjusted according to price indexes. | | Read More » | | | Purchasing Power | | Purchasing power is the value of a currency in terms of the goods or services that one unit of it can buy. | | Read More » | | | Real Interest Rate | | A real interest rate is one that has been adjusted for inflation, reflecting the real cost of funds to the borrower and the real yield to the lender. | | Read More » | | |  | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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