Inflation: "A state in which the value of money is falling, i.e., prices are rising." In other words, inflation is a rise in price levels with additional characteristics. It is incompletely anticipated, it does not increase to further rises, it does not increase employment and real output. Debtors gain when they pay back their debt during inflation. It is because the value of money was high when they borrowed but came down when they repaid their debts.