TOPIC:- INFLATION

IN WHICH WE WILL DISCUS :

  • What is inflation
  • When inflation is occure
  • Impact of inflation
  • When inflation is benificial for economy
  • How to controle inflation

what is inflation

Decline value of money

inflation is defined a sustaioned increase in the general level of prices for goods and services.

There are several variations on inflation:-

  • Deflation :- Deflation is when the general level of prices is falling. This is opposite of inflation.
  • Hyperinflation:- Hyperinflation is unusual rapid inflation 
  •   Stagflation is a term coined to mean high unemployment (stagnation) and high inflation. 

Rate of Inflation

The inflation rate is the percentage change in the overall level of prices from one year to the next.

Rate of inflation in year (t)

                                        =Pt  - Pt - 1 / Pt -1*100

When inflation is occur 

Inflation occurs due to an imbalance between demand and supply of money change in production and distribution cost. Increase in taxes

Impact of inflation:-it has worst impact on consumers high prices of day to day goods make it difficult for consumers to afford even the basics commodities in life.

when inflation is benificial for economy:An inflation rate of 2% or 3% is beneficial for an economy as it encourages people to buy more and brrow more because during times of lower inflation ,the level of inflation rate also remains low ,hence the government as well as the central bank alwase strive to achieve a limited level of inflation

  • SOME OF IMPORTANT MEASURES TO CONTROL INFLATION ARE AS FOLLOWS
  • Monetary Measures 
  • fiscal measures 
  • other measures

MONETARY MEASURES

   Reducing; 

  • credit control
  • demonstration  of currency
  • issue of new currency

FISCAL MEASURES

Reduction in unnecessary expenditure

  • increase in taxes
  • increase in saving
  • surplus budgets
  • public dept

OTHERS

  • to increase production
  • rational wage policy
  • price cantrol

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