Inflation

Syllabus tag: KCSE | Business Studies | Form 4 | Topic 27 Inflation

Lesson objectives

By the end of this topic, you should be able to:

• Define inflation and explain how it is measured.
• Distinguish demand-pull, cost-push and imported inflation.
• Describe the levels of inflation and its effects.
• Explain how inflation is controlled by monetary, fiscal and statutory measures.

Summary

Inflation is a persistent rise in the general price level, measured by the Consumer Price Index. Its types are named by cause: demand-pull (too much spending), cost-push (rising costs of production) and imported (dearer imports). It redistributes wealth from lenders and savers to borrowers, and is controlled by monetary, fiscal and statutory measures.