When the overall level of prices in the economy is increasing,we say that the economy is experiencing

Question

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When the overall level of prices in the economy is increasing, we say that the economy is experiencing inflation. This means that the purchasing power of money is decreasing, as it can buy fewer goods and services than before. Inflation can have negative consequences such as reducing consumer spending and increasing borrowing costs, among others. Therefore, controlling inflation is an important goal of monetary policy by the central bank.

When the Overall Level of Prices in the Economy Is