How do economists measure inflation? What is the major cause of inflation?

Expert Solution

Economists use a basket of goods that are geenrally used by the household in the market and they check the increase in the price of those goods, for example if the average price of basket increase by 10% over a year, then the inflation in the market has increased by 10%.

there are two majkor causes of infliton in the market they are:

Demand pull inflaiton, if the demand for the goods in the market increase a lot then the cost of the goods increase and that lead to an inflation
Cost push inflation, if the price of the input goods increase in the market then the price of the goods increase and that leads to a higher price and inflation in the market.

Rahul Sunny answered 2 years ago

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