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INFLATION
TOOBA KHAN
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PRESENTATION PLAN Introduction.
Effects on Economy. Other Terms. Types of Inflation. Reasons of Inflation. Measures to Control Inflation . Conclusion.
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INTRODUCTION……“Inflation is a rise in the general level of prices of goods and services in an economy over a period of time.”
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EFFECTS ON ECONOMY…
GENERAL EFFECT
NEGATIVE EFFECT
POSITIVE EFFECT
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GENERAL EFFECT
An increase in the general level of
prices implies a decrease in the
purchasing power of the currency.
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NEGATIVE EFFECT High or unpredictable inflation rates are
regarded as harmful to an overall economy.
Negative effects of inflation include a decrease in the real value of money and other monetary items over time.
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POSITIVE EFFECT…
Positive effects include a mitigation of
economic recession, and debt relief by
reducing the real level of debt.
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OTHER TERMS …. DISINFLATION – the reduction of
rate of inflation .
HYPERINFLATION-an out of control inflationary spiral .
STAGFLATION – high inflation combined with economic stagnation and unemployment.
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TYPES OF INFLATION..
Demand pull Inflation .Cost push theory .Pricing power Inflation .Sectoral Inflation .
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DEMAND PULL INFLATION.. It is caused by increases in
aggregate demand due to increased private and government spending.
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COST PUSH THEORY.. It is also called “supply shock
inflation”, is caused by a drop aggregate supply .
This may due to natural disasters , or increased prices of inputs..
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PRICING POWER INFLATION. Pricing Power Inflation is more often
called as administered price Inflation.. This type of Inflation occurs when the
business houses and industries decide to increase the price of their respective goods and services to increase their profit margins.
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SECTORAL INFLATION… The Sectoral Inflation takes place
when there is an increase in the price of the goods and services produced by a certain sector of industries …
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REASONS OF INFLATION Lack of balance in the country’s budget. Financial problem, financing the deficit of
money by printing. Sudden increase in production costs. Significant increase in the level of energy
resources. Faulty structure of the economy . Exported goods far exceeding imported ones. Too many monopolies in the economy. Imported Inflation . Problems with financial planning.
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MEASURES TO CONTROL INFLATION…
MONETARY POLICY
FISCAL POLICY
OTHER MEASURES
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MONETARY POLICY… It aims at reducing money supply
in the market.
CREDIT CONTROLISSUE OF NEW CURRENCY
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FISCAL POLICY.. It Majorly pertains to taxation and interest
policies .
REDUCTION IN UNNECESSARY EXPENDITURE
INCREASE IN TAX INCREASE IN SAVINGSURPLUS BUDGET PUBLIC DEBT
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OTHER MEASURES … Are those which aim at increasing
aggregate supply addressing aggregate demand directly…
INCREASE PRODUCTION. RATIONALE WAGE POLICY. PRICE CONTROL. RATIONING.
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CONCLUSION… From various monetary , fiscal and
other measures it becomes clear that to control inflation government should adopt all measures simultaneously.
Inflation is like a hydra-headed monster which should be fought by using all the weapons at the command of the government.
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Presented by TOOBA KHAN . ICMAP .