IN WHICH WE WILL DISCUS :
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:-
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
Reduction in unnecessary expenditure