Inflation

Inflation is defined as a sustained increase in the general level of prices for goods and services in
a
county, and is measured as an annual percentage change. Under conditions of inflation, the
prices of
things rise over time. Put differently, as inflation rises, every dollar you own buys a smaller
percentage
of a good or service. When prices rise, and alternatively when the value of money falls you have
inflation.

Deflation
Deflation is when the general level of prices are falling. It is the opposite effect of inflation.
Deflation
tends to occur more rarely and for shorter periods of time than inflation. Deflation occurs
typically
during times of recession or economic crisis and can lead to deep economic crises including
depression.
 Disinflation
Disinflation is a condition where inflation is still positive, but the rate of inflation is decreasing –
for
example from +3% to +2%.
 Hyperinflation
Hyperinflation is unusually rapid inflation, typically more than 50% in a single month. In
extreme cases,
this inflation gone awry can lead to the breakdown of a nation's monetary system or even its
economy.
One of the most notable examples of hyperinflation occurred in Germany in 1923, when prices
rose
2,500% in one month!
 Stagflation
Stagflation is the rare combination of high unemployment and economic stagnation along with
high
rates of inflation. This happened in industrialized countries during the 1970s, when a rocky
economy
was confronted with OPEC raising oil prices resulting in a demand shock for oil. This sent the
price of
oil – and all of the products and services that use oil as an input – higher, even as the economy
slackened.