What is Inflation ?

What is Inflation ?

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What is inflation?

Inflation and economy
Inflation is something bad at all?

Inflation is a modern economic disease which all consumers suffer from. When we are told that we have got a pay rise, we are naturally pleased. However, when we go to the shops, we find that we can actually buy less than we could a month ago. How is this possible?

The  reason, of course, lies in the fact that prices are rising all the time and general price increases are larger than the pay rises we receive.

Moreover, the money we have carefully saved in the bank cannot buy the house that we want because the price of the house has doubled. It seems that our salaries have gone down although our employers  have told us they have increased.

Therefore, it is not suprising that political parties win or lose elections according to how well they convince people that inflation can be controlled by their policies. In other words, the ordinary voter will support a government which persuades him that they will make pay rises equal to the increase of  prices in the shops, and they will also restore – bring back to its original state – the value of money.


As a result of this situation, we find that governments lose elections due to their economic policies. People are impatient and prefer to vote for a new government instead of waiting for old economic methods of action to become effective.

Unfortunately,  promises about controlling prices and salaries are not generally kept because there is no simple cure for the complex disease of inflation.


A. Write the meaning of each word.
1. to ‘convince’ (line 12): to
2. to ‘restore’ (line 15): to 3. ‘policies’ (line 17):
B. What do the following refer to?
1. “which’ (line 1):
2. ‘they’ (line 10):
3. ‘him’ (line 14):

C. Mark the statements as True (T) or False (F).

1. The news of a pay rise gives us pleasure.

2. After a pay rise, we cani buy as much as we used to.

3. The best way to buy a house is by saving money in a bank, where the value of our money is protected.

4. An ordinary voter mostly doesn’t wait for the economic policies of the old government to become effective but votes for a new one.
1. Why can we buy less after we get a pay rise?



2. What does the success of a political party depend on in an election?
3. Why is it difficult to control inflation?
4. Which of the following expresses the main idea of the text?

a) Inflation is an economic disease which can be controlled immediately.

b) Inflation, which reduces the value of money, also affects people’s choice of a political party.

c) Inflation can be controlled with effective economic policies which political parties promise to put into practice.

d) Inflation is a disease that is caused by the increase in the amount of goods bought.



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