What does "inflation" mean?

An increase in the general price level of an economy. Inflation occurs when the quantity of money in circulation rises relative to the quantity of goods and services offered. The result is 'too much money chasing too few goods,' and prices are bid up. At high rates of inflation, people tend to lose confidence in money, and the quantity of money in circulation increases relative to expenditures in current prices as people tend to hold (hoard) goods rather than money. Inflation is associated with a rise in gross national expenditure at current prices that is greater than the increase in the real supply of goods and services available.

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