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What is Inflation for Kids| Financial Education | Financial Capability |Finance for Kids | Inflation

Welcome to our video about inflation for kids! In this video, we'll be exploring what inflation is and how it affects the economy.

Inflation is the rate at which the general price level of goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.

Inflation is measured by the percentage change in the Consumer Price Index (CPI) over a period of time. The CPI is a measure of the average price of a basket of goods and services consumed by households.

There are several causes of inflation, including an increase in the supply of money, an increase in government spending, and an increase in the cost of production.

Inflation can have both positive and negative effects on the economy. A low and stable rate of inflation is generally considered to be good for the economy, as it allows businesses and individuals to make long-term plans and investments with confidence. However, high and unpredictable inflation can have negative effects, such as eroding the purchasing power of money and leading to economic instability.

To manage inflation, central banks use a variety of tools, such as setting interest rates and controlling the money supply.

It's important for individuals and families to understand inflation and how it can affect their financial decisions. For example, saving money in a high-interest savings account can help to offset the effects of inflation, as the interest earned can help to preserve the purchasing power of the money saved.

We hope that you've enjoyed learning about inflation! It is an important economic concept that can have a significant impact on the economy and our daily lives.

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