Underemployment arise when people are counted as employed even if they can only find part-time jobs or if they are vastly overqualified for the job. Counting underemployed persons as employed underestimates unemployment. When the price level increases, more must be spent to buy the same goods and services. Inflation is a sustained increase in the average level of prices. Hyperinflation is very high inflation.
Deflation is a sustained decrease in the average level of prices.
We typically measure inflation on an annual basis. Sources of Inflation Inflation can be attributed to one of two sources. Demand-Pull Inflation Inflation caused by an increase in aggregate demand. The rising aggregate demand curve pulls up the price level. Cost-Push Inflation Inflation caused by a decrease in aggregate supply.