in first part of this power point presentation, you'll know about business cycle and some basic terminology of business cycle graph.
In second part, you'll understand the basic concept of inflation, i.e.. definations, types, causes, measures, etc...
Hope, it'll be benificial to you
THANKYOU :)
3. BUSINESS CYCLE :
IT REFERS TO PERIODS
OF EXPANSION &
CONTRACTION. A PEAK
IS THE HIGH POINT
FLOWING A PERIOD OF
ECONOMIC EXPANSION.
A TROUGH IS THE LOW
POINT FOLLOWING A
PERIOD OF ECONOMIC
DECLINE.
4. EXPANSION : IN THE BUSINESS CYCLE,
CONSUMER & BUSINESS SPENDING RISES.
5. PEAK: AFTERA PERIOD OF GROWTH,AN ECONOMYWILL REACHAPEAK,
WHERE BUSINESS IS PRODUCINGAT OR NEAR FULL CAPACITY, & THE
ECONOMY ISAT OR NEAR FULL EMPLOYMENT
6. RECESSION: THIS IS A PHASE WHEN REAL GDP BEGINS TO
DECLINE. CONSUMERS & BUSINESS REDUCE THEIR SPENDING,
UNEMPLOYMENT RISES, INVESTMENT DECLINES.
7. DEPRESSION: THIS IS THE LOWEST POINT OF BUSINESS CYCLE.
FACTORIES WILL BE OPERATING BELOW CAPACITY,ALLOWING
UNEMPLOYMENTTO REACH IGH LEVELS
8. INFLATION
Inflation is a rise in the general level of prices of
goods and services in an economy over a period of
time.
Inflation also reflects an erosion in the
purchasing power of money
Inflation's effects on an economy can be positive
or negative.
The rate of inflation is measured by the annual
percentage change in the level of prices as
measured by the consumer price index.
9. MEASURING INFLATION
Inflation is usually estimated by calculating the inflation rate of a price index,
usually the Consumer Price Index.
The Consumer Price Index measures prices of a selection of goods and services
purchased by a "typical consumer“
The inflation rate is the percentage rate of change of a price index over time.
Producer price indices(PPIs)
Commodity price indices
Core price indices
11. DEMAND PULL INFLATION: It is caused by increases in aggregate
demand due to increased private and government spending.
THE COST-PUSH INFLATION: When the cost of making goods go up, they
have to make prices higher to make profit out of selling that product.
PRICING POWER INFLATION: Pricing power inflation is more often called
administered price inflation. This type of inflation occurs when the business
houses and industries decide to increase the prices of their respective goods and
services to increase their profit margins.
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. For instance, an increase in the cost of crude oil would directly affect
all the other sectors, which are directly related to the oil industry.
12. TYPES OF INFLATION
CREEPING INFLATION: This type of inflation occurs when the price level
persistently rises over a period of time at a mild rate. When the rate of inflation is
less than 10 per cent annually, or it is a single digit inflation rate, it is considered
to be a moderate inflation.
GALLOPING INFLATION: If mild inflation is not checked and if it is
uncontrollable, it may assume the character of galloping inflation. Inflation in the
double or triple digit range of 20, 100 or 200 percent a year is called galloping
inflation .
13. (CONT….)
HYPERINFLATION: It is a stage of very high rate of inflation. Hyperinflation
occurs when the prices go out of control and the monetary authorities are unable
to impose any check on it. Nothing good can be said about a market economy in
which prices are rising a million or even a trillion percent per year.
STAGFLATION: It is an economic situation in which inflation and economic
stagnation or recession occur simultaneously and remain unchecked for a period
of time.
14. NEGATIVE EFFECTS OF INFLATION
Hoarding
Social unrest and revolts
Allocative efficiency
Shoe leather cost
Menu costs
15. MEASURES TO CONTROL INFLATION
Monetary policy
Fixed exchange rates
Gold standard
Wage and price controls
Cost-of-living allowance
