This document presents information about inflation from an economics perspective. It defines inflation as a rise in general price levels over time that reduces purchasing power. Causes include demand-pull and cost-push factors. Effects are on investment, interest rates, exchange rates, unemployment, and purchasing power. Types are based on degree of government control, political conditions, and scope. Controlling inflation involves monetary measures like interest rates and fiscal measures like taxation. The conclusion is that low inflation enables slow economic growth while excess money leads to higher costs.
1. Presentation on
Inflation
Presented by:
Navjot Bhogal
11010752
2. Contents
• Introduction
• Definitions
• Causes of inflation
• Effects of inflation
• Types of inflation
• Inflation rate
• Controlling inflation
• Conclusion
3. Meaning of inflation
• In economics, inflation is a rise in the general
level of prices of goods and services in an
economy over a period of time. When the
general price level rises, each unit of currency
buys fewer goods and services.
4. Definitions of inflation
• According to Webster's “An increase in the
amount of currency in circulation, resulting in a
relatively sharp and sudden fall in its value and
rise in prices: it may be caused by an increase in
the volume of paper money issued or of gold
mined, or a relative increase in expenditures as
when the supply of goods fails to meet the
demand.
• According to Prof. Samuelson “inflation occurs
when general level of prices & cost are rising”.
6. Effects of inflation
• Investment
• Interest rates
• Exchange rates
• Unemployment
• Stocks
• Decrease in the purchasing power
• Change the allocation of income
7. Types of inflation
1. On the basis of the degree of the govt
control
• Open inflation
• Suppressed inflation
8. 2. on the basis of political conditions
War-time inflation Peace time inflation
9. 3. On the basis of scope
• Sectoral inflation
• Comprehensive inflation
10. Inflation rate
India Inflation Rate
• The inflation rate in India was last reported at 8.8 percent
in February of 2012.
• From 1969 until 2010, the average inflation rate in India
was 7.99 percent reaching an historical high of 34.68
percent in September of 1974 and a record low of -11.31
percent in May of 1976.
11.
12. Controlling inflation
There are broadly two ways of controlling inflation in an
economy:
•
1). Monetary measures
2). Fiscal measures
Monetary Measures
• The most important and commonly used method to control
inflation is monetary policy of the Central Bank. Most central
banks use high interest rates as the traditional way to fight or
prevent inflation.
13. Monetary measures used to control inflation
include:
(i) bank rate policy
(ii) CRR
(iii) open market operations
14. II). Fiscal Measures
Fiscal measures to control inflation include
taxation, government expenditure and public
borrowings.
15. Fiscal measures used to control
inflation include:
(i)Increase in Taxes
(ii) Increase in savings
(iii) surplus budgets
16. conclusion
In reality, low inflation rate and an upward
economic growth is never possible.
Nevertheless, low inflation rate means slow
economic growth. Whenever, money is in
excess, there is bidding by the consumers due
to which the cost of goods escalate.
