Ex1 – Ex2 = In1 – In2
The mathematical equation you are viewing is probably one of the most feared one in the world—so feared in fact that it led to the removal of this famous American economist Irving Fisher’s theories from economics text-books in India since liberalization. The simplicity of this equation is that it empowers people to check what is happening in their country. Science has always to be simple and a tool to enhance the knowledge of people and empower them for self-governance. Though on governmental propaganda this greatest economist was slandered and ridiculed in US, but post the US collapse he was dug out from his grave and elevated to his rightful honour in US and Europe.
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time. Inflation is classified into two parts. The relation between the inflation real interest rates and nominal interest rates (approximated to inflation) and thus the foreign exchange rates is given by the famous American economist Irving Fisher. When governments want to manipulate inflation rates first thing they do is remove Fisher and his theories from economics text-books as was done in India since liberalization.