Inflationary Expectations

It is hard to live in today's society and not be aware of inflation. Every year it makes the money we have stashed away in our mattresses worth less than it was last yaer. The inflation rate is therefore an important indicator that influences our general expectation for the future. Classically, inflation and unemployment are the two bugbears of macroeconomic policy. High inflation can seriously hurt an economy. At extreme levels, very high inflation is known as hyperinflation. This is bad for firms and consumers, but it's even worse for polititians.

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