The inflation rate is the percentage change in the price level from one year to the next. Deflation is a situation in which the price level is falling and the inflation rate is negative.
Inflation is frequently measured in broad terms, such as the general rise in prices or the rise in the cost of living in a country. Inflation is the gradual loss of purchasing power caused by price increases. Overall reduction in level of prices for goods and services is known as deflation. The nominal costs of capital, labor, goods, and services decrease as a result of deflation.
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