Inflation, deflation & disinflation

Inflation is the word you hear at the fuel pump and in the shops almost every week. In this Advanced Subsidiary lesson we define inflation, deflation and disinflation precisely, measure inflation with a weighted Consumer Price Index and work the numbers ourselves, separate money values from real values with a real-wage calculation, and draw the two causes — demand-pull and cost-push — on an aggregate demand and supply diagram. We finish by weighing the consequences for consumers, workers, firms and the government, with Namibia's rand-linked, imported inflation running throughout.