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                                                         Inflation

Inflation is the overall general upward price movement of goods and services in an economy. Inflation is caused by the amount of demand in an economy and total dollars spent. Though inflation is complex and influenced by many factors, we can help to demonstrate inflation by considering what happens when the price of some products rise due to an increase in the cost of a particular raw material required to manufacture them. If consumers want to buy the same amount of goods and services as before, they will now have to spend more (overall) because goods have become more expensive. This is only possible if their incomes are rising, or alternatively, if consumers are prepared to spend a bigger proportion of their incomes