Inflation,deflation, stagflation , reflation [jagath]

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Inflation,deflation, stagflation , reflation [jagath]

  1. 1. Inflation, Deflation, Stagflation & Reflation By, Jagath Khatri
  2. 2. Inflation Meaning; Inflation is a rise in general level of prices of goods & service in an economy over a period of time. Definition; Crowther- defines inflation as “a state in which the clause of money is falling i.e., prices are rising. Prof.Coulbourn- defines inflation as “too much of money chasing too few goods”
  3. 3. Causes of Inflation Changes in money supply. Change in disposable income. Changes in business and consumer expenditure. Changes in demand of goods and services.
  4. 4. Effects of Inflation Effect on production and employment. Effect on fixed income group. Effect on debtors and creditors. Effect on wage and salary earners. Effect on farmers.
  5. 5. Deflation Meaning; Deflation is a decrease in the general price level of goods and services. It occurs when the inflation rate falls below 0%. It increases the real value of money of a nation, this allows one to buy more goods with same amount of money.
  6. 6. Causes of Deflation Shift in supply & demand curve. Reduction in money supply. Technological development. Increases in supply of goods & Decrease in supply of money. Cash building. Fall in demand causes fall in price
  7. 7. Effects of Deflation Decreasing nominal prices for goods & services. Increasing buying power of cash money. Decreased investment. Benefits recipient of fixed income.
  8. 8. Stagflation Meaning; Stagflation is a combination of Stagnation & Inflation, a situation where an inflation rate is high, the economic growth rate slows down, & unemployment remains steadily high. Causes; Supply Shock Inappropriate macro economics policies
  9. 9. Effects of Stagflation Reduction in the value of money Increase in prices of goods High Unemployment Poor economic growth Effect on fixed income group
  10. 10. Reflation Meaning; Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes, there by seeking to bring the economy back up to the long-term trend, following a dip in the business cycle. Reflation is considered to be an antidote to deflation

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