Explanation : In economics inflation means, a rise in general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Thus, inflation results in loss of value of money. In such a situation living cost rises. Besides, profits normally increase, faster than wages whenever prices rise faster than wages. An increase in inflation (the price level) decreases exports and has negative effect on the balance of payments. Exports become less competitive. ....Read more