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What is Inflation? Comments

  • By Jocelyn Black Hodes, DailyWorth's Resident Financial Advisor
  • June 21, 2013

The opposite of deflation, inflation is the increasing price of goods and services in an economy that is often caused by a increase in the money supply. Inflation is generally measured by the Consumer Price Index and the Producer Price Index. Because of inflation, the value and purchasing power of a dollar decreases over time. While the annual rate of inflation has fluctuated greatly over the last half century, ranging from nearly 0% - 23% inflation, the Federal Reserve Bank (aka "the Fed") actively tries to maintain a specific rate of inflation, which is usually 2-3%.

 

See Also:

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Can You Protect Your Portfolio from Inflation?

Investing 101: Why, What, and How

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