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  1. Beginner
    Early Stages for Beginners
    8 Topics
  2. Forex Terminology
    11 Topics
  3. Margin & Leverage
    2 Topics
  4. Personal Psychology Questions
    2 Topics
  5. Psychology for Beginners
    7 Topics
  6. Intermediate
    Identifying Scams
    2 Topics
  7. Brokers for Beginners
    5 Topics
  8. Technical Analysis
    13 Topics
  9. Market Structure
    5 Topics
  10. Completion
    Risk Management for Beginners
    8 Topics
  11. Fundamental Analysis
    9 Topics
  12. Advanced
    Using Indicators
    6 Topics
  13. Technical Analysis (Part 2)
    8 Topics

Inflation

The correlation between Inflation and the GDP is huge! First off: Inflation is the cost of a basket of goods in that particular country. Just like GDP shows how well an economy is doing, inflation measures how expensive an economy is, right now and over time. When someone says inflation has been occurring within ____ country since 1995, all they’re saying is, it’s getting more and more expensive to live here!

Inflation is lowkey directly affected by GDP growth over time too! Remember. GDP reflects how WELL an economy is doing. If an economy is doing well and HAS been for a number of years, what do you think they’re going to do with prices? Raise them naturally! A can of soda was a nickel for 70 years, 25 cents in the 60’s, 40 cents in the 70s, 80 cents in the 90s, and now at a convenience store, it’ll probably cost $1.39! Slow growth over time is better than hyperinflation, which turns the cost of goods and service to increase dramatically and fast.

Too low of a GDP or a GDP not getting better makes it hard for businesses to scale their company as big as they want because the economy as a whole isn’t doing as well. Too high of a GDP is bad too because it means the country is expanding rapidly, which means inflation has to rise as well! An ideal world would be for both to slowly grow at the same time. Deflation (opposite of inflation) can also be bad because it means the economy isn’t growing as it should be, whether it’s remaining stable or getting worse.