Originally posted by alvin-ncs:
Qestion 1:
the meaning of inflation in simple term...
Question 2:
what is Exchange rate...in simple term...
Question 3:
what is the meaning of elasticity in simple term...
1. Inflation refers to the persistent rise in general price levels of all goods and services between two consecutive years.
2. Exchange rate is all about whether the country's currency depreciates (fall in value) or appreciates (rise in value). Depreciation or appreciation is usually determined by whether there is a deficit or surplus in the capital or the current account respectively. Both capital and current accounts together constitute what you would later or probably have learnt as Balance of payments.
3. Elasticity can be categorised into three types - price elasticity (of demand or supply) in short known as PED or PES respectively, income elasticity as YED and cross-price elasticity as CED. YED is the degree of responsiveness of quantity demanded of a good to change in price, ceteris paribus. The definition of PES is somewhat similar to PED but just that you have to substitute the terms 'quantity supplied' for 'quantity demanded'. CED is the degree of responsiveness of quantity demanded of a good to a change in price of another good, ceteris paribus.