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WHAT IS INFLATION In the economy the study of increases and decreases in general consumer goods or services prices is referred to as inflation and deflation – respectively. Economists studying inflation or deflation study either a sustained increase or decrease in the general price level over time. The study of such is important as the effect of price levels within society effect all participants in the economy including individuals, business and government. Inflation and deflation is …

…s any figure below 10% was an acceptable rate of inflation. In the 1980’s anywhere in between 3% - 4% and 10% was an acceptable rate of inflation. In the 1990’s we returned to the thoughts of the 1960’s believing that an acceptable rate of inflation for Australia was between 3% and 4%. To maintain that balance of inflation rates – governments need to be extremely perceptive and “see” the problems of inflation or deflation before they happen – and then correct them.