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Inflation
This is the process by which the price level rises and
money loses value.
It can be further categorized into following:
a)Demand-pull inflation
b)Cost-push inflation
It can be commonly described as ,“too much money
chasing too few goods”.
Demand pull inflation may be due to :
Increase in money supply
Increase in government purchases
Increase in exports
Cost-push inflation is a type of inflation caused by
substantial increases in the cost of important goods
or services where no suitable alternative is
available.
Causes of Cost push inflation are:
Increase in money wage rates
Increase in money prices of raw materials.
i) Creeping Inflation
ii) Walking Inflation
iii) Running Inflation
iv) Galloping Inflation
v) Hyper Inflation
• Price rise is quite low
• Rate of inflation is upto 3% per annum
• Not considered to be damaging for
economic growth
 Rate of inflation is (3-10)% per anuum
 Developing countries experience this
range of inflation
• Inflation rate becomes alarming ,the rate lies
between the (10-20)% per annum
• It is a reason of worry
• Inflation Rate goes beyond 20% per annum
• This situation is hard to cope with because
all economic policies gets derailed
• Inflation rate is huge about 1000% per annum
• It was really something we can call a “DISASTER”.
• Extremely rapid or out of control inflation.
*There is no precise numerical definition to
hyperinflation. Price increases are so out of control
that the concept of inflation is meaningless.
*The most famous example of hyperinflation occurred
in Germany between January 1922 and November
1923.
By some estimates, the average price level
increased by a factor of 20 billion!
1. Excess liquidity of money
2. Credit Expansion
3. Government Investment
4. Fiscal Policy
5. Poor Infrastructure
6. Black Marketing & Corruption
7. Shortage of essential commodities
8. Population growth
*At Macro Level
*At Micro Level
*Effect on distribution of income and wealth
*Impact on Output and Employment
*Impact on Government Revenue
*Consumer is a loser; Sellers are the gainers
*Rich get Richer and Poor get Poorer
*Excess Liquidity Of money
*Credit Expansion
*Government Expenditure
*Government Investment
*Fiscal Policy
*Rate Of production is low
*Population Growth
*CORRUPTION
*Money supply should be controlled
*Credit expansion should be controlled
*Production should be se(increase)
*Hoarding and Black Marketing should be
avoided
INFLATION

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INFLATION

  • 2. This is the process by which the price level rises and money loses value. It can be further categorized into following: a)Demand-pull inflation b)Cost-push inflation
  • 3. It can be commonly described as ,“too much money chasing too few goods”. Demand pull inflation may be due to : Increase in money supply Increase in government purchases Increase in exports
  • 4. Cost-push inflation is a type of inflation caused by substantial increases in the cost of important goods or services where no suitable alternative is available. Causes of Cost push inflation are: Increase in money wage rates Increase in money prices of raw materials.
  • 5. i) Creeping Inflation ii) Walking Inflation iii) Running Inflation iv) Galloping Inflation v) Hyper Inflation
  • 6. • Price rise is quite low • Rate of inflation is upto 3% per annum • Not considered to be damaging for economic growth
  • 7.  Rate of inflation is (3-10)% per anuum  Developing countries experience this range of inflation
  • 8. • Inflation rate becomes alarming ,the rate lies between the (10-20)% per annum • It is a reason of worry
  • 9. • Inflation Rate goes beyond 20% per annum • This situation is hard to cope with because all economic policies gets derailed
  • 10. • Inflation rate is huge about 1000% per annum • It was really something we can call a “DISASTER”. • Extremely rapid or out of control inflation. *There is no precise numerical definition to hyperinflation. Price increases are so out of control that the concept of inflation is meaningless. *The most famous example of hyperinflation occurred in Germany between January 1922 and November 1923. By some estimates, the average price level increased by a factor of 20 billion!
  • 11. 1. Excess liquidity of money 2. Credit Expansion 3. Government Investment 4. Fiscal Policy 5. Poor Infrastructure 6. Black Marketing & Corruption 7. Shortage of essential commodities 8. Population growth
  • 12. *At Macro Level *At Micro Level
  • 13. *Effect on distribution of income and wealth *Impact on Output and Employment *Impact on Government Revenue
  • 14. *Consumer is a loser; Sellers are the gainers *Rich get Richer and Poor get Poorer
  • 15. *Excess Liquidity Of money *Credit Expansion *Government Expenditure *Government Investment *Fiscal Policy *Rate Of production is low *Population Growth *CORRUPTION
  • 16. *Money supply should be controlled *Credit expansion should be controlled *Production should be se(increase) *Hoarding and Black Marketing should be avoided