The document discusses inflation, including its definition, causes, and effects. Inflation is defined as a rise in general price levels reported as a percentage change from a base year. Common causes of inflation include demand-pull factors like shortages, cost-push factors like increases in wages, and excessive monetary growth outpacing economic growth. Effects of inflation include a decreased purchasing power of currency, changes in consumer and investor spending habits, speculation on high-risk investments, and changes to the distribution of income between lenders and borrowers.

1. INFLATION 