In economics, inflation can be explained as a persistent increase in the general price level of goods and services over a period of time. Inflation results in a reduction in the purchasing power per unit of money which means money losses it’s real value over period of time. The inflation rate is measured by inflation index . Inflation index shows the change in percents of general price index also called consumer price index over the period of time. (Mankiw, 2002).
There are described three types of inflation:
1. Demand-pull inflation which is caused by increases in aggregate demand due to increased private and government spending; 2. Cost-push inflation ...
