Price stability: the general level of prices is kept constant or grows at an acceptably low rate over time.
Inflation: a sustained increase in the general price level over time
Rate of inflation: the rate at which the general price level rises over time.
CPI- offficial measure of the rate of inflation.
The government takes an average basket of goods and records the change in price.
Causes: demand pull and cost push.
Demand pull, when the total ad of the economy rises.
Cost push: when costs of production…