Answer to Question #292390 in Macroeconomics for Ali

Question

what are the determinants of the rate of inflation? What role do macroeconomics polices play in determining inflation rate?

Answer 1

Most of the studies also find that the main determinants affecting inflation are money supply, interest rate and exchange rate.

Inflation is the rate at which the prices for goods and services increase. Inflation often affects the buying capacity of consumers. Most Central banks try to limit inflation in order to keep their respective economies functioning efficiently.