The word inflation comes from the Latin " inflation " and is made up of the prefix " in " which means "to blow " plus the prefix " tion " which refers to action and effect. the term refers to the generalized and sustained increase of goods, services and productive factors within an economy in a given period.
This means that inflation, when the prices of goods and services rise, generates a fall in the purchasing power of money, and they have a great loss of real value in the internal environment of the action, of the results and unit of account in the economy.
The effects of inflation in an economy are diverse and can be positive or negative, the negative effect is the growth in the real value of money, where future inflation can stop investment and saving and too high inflation that can lead to the shortage of goods if consumers start to hoard for fear that prices will rise a lot.
The positive effects influence the guarantees of the Central Banks where they adjust the nominal interest rates and increase the intensity of vision in non-monetary capital projects.
In order to stop inflation, central banks tend to increase the growth of the interest rate on public debt.
But then as the consumer interest rate increases, the demand for products stops, and when the demand for products stops, the industry that produces them stops.
