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Inflating occurs when a government prints more money, growing the money supply, but in so doing devaluing individual units of the currency. Prices go up.

Expanded Definition

Inflation may be added to the real gross domestic product (real GDP) to obtain the nominal gross domestic product (nominal GDP). Put more simply, inflation pumps up real growth to the nominal number you'll see reported in the media.

Use of Term in a Foolish Sentence

"Although the government of the fictional island chain of Greater Atlantis reported 5.7% gross domestic product (GDP) growth for 2008, that was mostly due to the dictator inflating his currency 5.0%; the growth in real GDP, largely driven by sales of retro-Furbees, was just 0.7%."

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