This document defines and discusses inflation. It begins by defining inflation as a sustained increase in prices or fall in the value of money. Inflation occurs when the money supply exceeds production levels. It further explains that inflation is a general rise in prices over time which reduces the purchasing power of currency. A key measure of inflation is the inflation rate, which is the percentage change in a price index like the CPI. The document also discusses different theories of inflation including the monetarist view that inflation is primarily caused by increases in the money supply as described by the quantity theory of money. It outlines some common causes of inflation including demand-pull factors and cost-push factors. Finally, it notes that inflation is measured using price