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Inflation is better than deflation.



🧠 What Is Inflation (In Simple Words)?

Inflation means that prices go up over time.

You need more money to buy the same thing.

🥪 Example: The Sandwich Story

Imagine your school cafeteria sells a sandwich:

  • Last year: Sandwich cost $5

  • This year: The same sandwich costs $6

That $1 increase is inflation. Your money now buys less than before.

🤔 Why Does Inflation Happen?

  1. Too many people want to buy things
    (High demand, not enough stuff → prices go up)

  2. It costs more to make things
    (Ingredients, wages, electricity get more expensive)

  3. More money in the system
    (If people have more money, they spend more → prices rise)

🔥 Is Inflation Bad?

  • A little inflation is good
    → It means the economy is growing. People are spending, businesses are doing well.

  • Too much inflation is bad
    → Prices rise too fast. Your money loses value.

  • No inflation or falling prices is also bad
    → People stop buying things. Businesses struggle.

🎯 Can We Make It Zero?

Yes, but it’s not a good idea.
If prices don’t rise at all, companies might stop growing, people might lose jobs.

That’s why most countries try to keep inflation around 2% per year.

💡 Quick Summary

  • Inflation = prices going up over time

  • A little is good (like a small campfire 🔥)

  • Too much is bad (like a wildfire 🔥🔥🔥)

  • Too little is also bad (like no fire on a cold night ❄️)