what is inflation and how it affects the economy ??

Inflation: - Generally inflation is defined as rise in general price level but can be elaborated as the persistence and continuous decrease in the value of money------(due to excess supply of money in market and ----decrease in supply of goods and commodities) is known as inflation.

There are four stages of inflation:-

Creeping inflation: - below 2%

Walking inflation: - 2-4 %

Running inflation: -4-8%

                                                                                       

Galloping inflation: - above 8%

Sometime it occurs due to imbalance in the foreign market and sometime it happens due to unstable economy.

So here money supply is one of the main reasons which control inflation.

That is why RBI always try to change the rates like Repo rate, Reverse repo rate, CRR because these rates controls money supply and so money supply checks inflation.