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Now before we understand what price inflation is, let’s take a sneak peek on what economics and macroeconomics are:
- Economics and Macroeconomics –
Economics says, “Wants of humans are unlimited, whilst available resources are scarce”. It does deal with how an individual deals with problems that arise due to scarcity and how does he/she response to these changes. Macroeconomics is a division of economics that deals with the whole of the economy. It studies about behavioural changes in economic aggregates like aggregate (income, overall level of price, investment and consumption). All these factors have an effect on economy as a whole.
- Price and inflation –
By the definition of price and inflation, we would mean the increase in price of any service and goods over a specific time frame. This is also because of the factor that an amount of very nominal money, that is available in the market, has a tendency to grow every year that too in relation to supply of services and goods available to purchase.
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