March 28, 2023

Why does inflation (in the economy) exist, and who controls it?

Inflation is an unavoidable part of life in any economy, but it doesn't have to spiral out of control. Inflation is the rise in prices of goods and services over a period of time, and is usually caused by an increase in the money supply. Inflation is controlled by central banks, which use monetary policy to manage the money supply and set interest rates to keep inflation within a target range. Inflation can be good or bad depending on the situation, but it's always important to keep it under control. If inflation becomes too high, it can cause economic instability, which can lead to recession or even depression. By controlling inflation, central banks can help ensure that prices don't rise too quickly, allowing the economy to stay stable and healthy.