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Inflation is a continued and sustained rise in the general price level or, equivalently, a continuous decrease in the value of money. Thus, it is not an increase in just one price or a few prices but in a large number of prices at once; not a one-time increase, but an increase that spreads out over time; and not a temporary, reversible increase, such as the increase in the prices of certain consumer goods around Christmas, but a sustained increase. Usually, inflation is measured by the change in some price index, based on a broad basket of goods and services, such as the gross domestic product deflator or the consumer price index.

What Causes Inflation?

Many different factors may cause the price of a good to increase ...

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