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workers become more costly to employ and may lose their jobs who contract for the cost of living allowances of 10% a year when the inflation rate falls to 4%
The rate at which prices increase over a specific time period is known as inflation. Inflation is often measured in broad terms, such as the general rise in prices or the rise in a nation's cost of living.
Although low inflation might be detrimental, both levels can hurt the economy. The Fed will adopt the opposite strategy when the economy is having trouble and inflation is too low by cutting interest rates or purchasing assets to boost cash flow.
An economy experiences deflation, also known as negative inflation when prices generally decline. This may be due to a higher supply of commodities than there is a demand for those items, but it might also be due to an increase in the purchasing power of money.
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