Infation

 Inflation is referred to as the situation when the price level of goods and services rise, which leads to decline in the purchasing power in the economy or in other words decreases the buying power of the money.Inflation is measured by two indices, CPI (Consumer Price Index) and Wholesale Price Index (WPI)

Demand-pull inflation exists when aggregate demand for a good or service outstrips aggregate supply.Cost-push inflation can occur when higher costs of production decrease the aggregate supply (the amount of total production) in the economy.