Imagine you have a piggy bank with $10. Every year, your parents give it an extra dollar, that’s like inflation. But sometimes they give more or less than expected, which surprises you. Inflation rates work the same way: they tell us how much prices change over time, and when they’re higher or lower than we expect, people get surprised.
Examples
- You buy a candy bar for $1 last year, but this year it's now $1.20, that’s inflation!
- Your parents get a raise, so you can afford to buy more toys each year.
- A new toy comes out and everyone wants one, making the price go up quickly.
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See also
- Why Do We Have Different Kinds of Taxes?
- Why Do Prices Change So Much?
- Why Do We Use Money Instead of Bartering?
- Why Do Prices Go Up So Much When There's a Shortage?
- Why Do We Have Different Kinds of Coins?
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Categories: Economics · inflation,economy,monetary policy