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1. Inflation
Review of the article “The Association and Impact of Inflation and
Population Growth on GDP: A Study of Developing World,” by Khan, et
al, (2013)
Primarily, this article center on the discussion of effects of inflation on
the economy and precisely on effects of inflation on population growth
and GDP in developing nations. An overriding theme is presented in the
article showing inflation has negative effects, as such, upsetting to an
economy. Negative inflation effects in an economy include reduction or
stagnation in disposable income, decline in individual savings and tax
increases; hence, currency depreciation, increase in import prices as
well as national savings. At inflation onset, the levels of income for
individuals in an economy also become stagnant and they remain there
as the rate of inflation intensifies.
Stagnation lead to tax increases in which case individuals get taxed a
higher percentage of their income on services and good they consume.
Increase in the tax bracket leads to low saving power of individuals in
the economy. Additionally, individuals also save less during inflation as
they are afraid their cash will diminish persistently in value at future
dates. Such pessimistic perception leads to low national saving.
Inflation leads to local currency to degrade value, leading to reduction
of purchasing power. This makes imports more costly than exports.
These negative inflation effects have great impacts on population
growth and GDP in developing nations.
Generally, inflation leads to a decline in GDP growth in developing
countries. As already aforementioned, inflation effects on the economy
are negative. Inflation impact on individuals in saving translates to
reduction in national saving. When the individuals in developing
economy have a preference for saving less during recession, they

2. reduce the function of saving of GDP, leading to reduction in overall
growth of the national GDP. Additionally, the growth of national GDP in
developing nations leads to decline during recession due to decrease of
national income. Income is a GDP function; as such, when there is a
decline in disposable income, national saving declines as well, reducing
the national rate of GDP growth.
Depreciation of currency in the period of inflation causes decline in
foreign direct investment in developing nations. Investment is a
function of national GDP and as such, a decline in the investment
results in decline of national GDP growth rate. National GDP growth is
correlated positively to population growth. As such, decline in the
national GDP it is an implication there is decline in population growth.
This means during inflation, population growth is low as a result of low
national GDP growth. Hard financial times that are experienced in the
cause of inflation lead to negative impact on the health of individuals
and life expectancy. Decline in the life expectancy and health in the
course of inflation have pronounced effect on population growth in
developing nations; population growth declines. This article, evidently
relates to inflation since it provides a clear picture of inflation effects on
the economy and precisely, effects of national GDP and population
growth. This article, outlines various forms of economic components
that are affected by inflation in developing nations, and how these
effects translate into reduced population growth and GDP.
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3. References
Khan, A., Z., Yahya, F., Nauman, M. &Farooq, A., (2013).‘The Association
and Impact of Inflation and Population Growth on DGP: A Study of
Developing World,’ International Journal of Contemporary Research in
Business, vol. 4, no. 9, pp. 903-911. Retrieved from: <http://journal-
archieves27.webs.com/903-910.pdf>