📈 What Is Inflation?
7th Grade 💰 Money & Economics
Inflation means prices go up over time, so the same dollar buys a little less than before.
Prices rise
If a candy bar cost $1 last year and $1.10 this year, its price went up 10%. When most prices rise like that, economists call it inflation.
Why it happens
Inflation can happen when people want to buy more things than businesses can make, or when making things gets more expensive — for example, when fuel prices rise.
Keeping it steady
In the US, the Federal Reserve tries to keep inflation low and steady, around 2% a year. A little inflation is normal; very high inflation makes life hard because savings lose value quickly.
Quick quiz
What happens during inflation?
Which US organization works to keep inflation steady?
If inflation is high, a dollar buys…