All Money, Prices and Central Banking Concepts

In economics, inflation is an increase in the average price of goods and services in terms of money, though it originally referred to the increase of the money supply (monetary inflation) that can cause such a universal shift.

Central bank independence refers to the degree of autonomy and freedom a central bank has in conducting its monetary policy and managing the financial system and inflation targeting.

Fiat money or fiat currency is a type of government-issued currency, generally created by a central bank, authorized by government regulation to be legal tender but not backed by a precious metal, such as gold or silver, nor by any other tangible asset or commodity.

Quantitative easing (QE) is a monetary policy action where a central bank purchases predetermined amounts of government bonds, company shares, or other financial assets (liquidity) in order to artificially stimulate economic activity.

A liquidity trap is a situation, described in Keynesian economics, in which, "after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers holding cash rather than holding a debt (financial instrument) which yields so low a rate of interest." Negative natural interest rates and a zero lower bound are necessary conditions of a liquidity trap.

In economics, Gresham's law is a monetary principle stating that "bad money drives out good".