This document defines inflation and presents its types, degrees, causes, measures to control it, and effects. It was presented by 4 students and defines inflation as a collective increase in money supply, incomes, or prices that decreases money's real value. The types of inflation discussed include structural, imported, open, suppressed, anticipated, and unanticipated inflation. Causes include increased demand and decreased supply. Measures to control high inflation involve increasing output growth, controlling money supply, population control, tax reform, and developing agriculture and industry. Both good and bad effects of inflation are outlined.

1. Presented by:
Anum Mehnaz
(938-FBAS/BSES/F16)
Saman Rubab
(964-FBAS/BSES/F16)
Sadaf Attique
(961-FBAS/BSES/F16)
Ayesha Sagheer
(945-FBAS/BSES/F16)
Presented to : Ma’am Sidra Bajwa

2. INFLATION

3. TABLE CONTENTS
• Definition of Inflation
• Types of Inflation
• Degrees of Inflation
• Causes of Inflation
• Measures to Control Inflation
• Effects of Inflation

4. DEFINTION OF INFLATION
• Collective increase in the supply of money, in money
incomes, or in prices refers to inflation.
• Due to inflation the real value of money i. e., the
purchasing power decreases.
• Today, inflation is one of the serious problems faced by
Pakistan.

5. TYPES OF INFLATION
There are many types of inflation and are as follows:
 STRUCTURAL INFLATION
Prices rise in an expanding economy because of
structural inflexibilities.
 IMPORTED INFLATION
local governments are helpless, it is due to an increase in
the prices of imported goods.
 OPEN INFLATION
If there is no control over rise in prices, it will determined
by free forces of demand and supply.

6.  SUPPRESSED INFLATION
If prices are subject to governmental control then their
increase is made by the government action.
 ANTICIPATED INFLATION
If the actual rate of inflation is perfectly in accordance
with the people’s expectations.
 UNANTICIPATED INFLATION
If the actual rate of inflation is not according to the
people’s expectations.
 PROFIT INFLATION
Greed of businessmen.

7. DEGREES OF INFLATION
There are three degrees of inflation.
 MODERATE INFLATION
When the rate of inflation is very low, in the range of 1% to
20%.
 GALLOPING INFLATION
When the rate of inflation exceeds 20 %.
 HYPER INFLATION
If the rate of inflation is above 1000 %.

8. CAUSES OF INFLATION
Causes of inflation in Pakistan are of two types:
 INCREASE IN DEMAND
It is due to increase in money supply or increase in currency, non-
productive expenditures, corruption and black money, population
bomb etc.
 DECREASE IN SUPPLY
It is due to low growth rate of agricultural sector in shortage of
productivity, slow industrial growth, increase in salary and indirect
taxes etc.

9. MEASURES TO CONTROL INFLATION
Following are measures to control high inflation.
 Increase in the growth rate of output.
 Government should control the supply of money through effective
monetary policy( controls supply of money).
 Control on population is also necessary.
 Effective tax system will be helpful to control the inflation.
 Improvement in balance of payment.
 Developments of agricultural and industrial sector will helps to
control the inflation.

10. EFFECTS OF INFLATION
There are both good and bad effects of inflation.
GOOD EFFECTS
 Increase in production.
 Employment opportunities.
 Economic development.
 More investment.

11.  Profit of the producers also increases when there is normal
inflation.
 BAD EFFECTS
 Huge problem for employees, taking fixed salaries.
 It generates unfair distribution of income and wealth.
 Inflation reduces the saving of the population.
 It creates a lot of social evils.

12.  Inflation reduces the living standard and purchasing power of
people.
 Inflation reduces the purchasing power.
CONCLUSIONS
Inflation is everywhere in an economy. Its rate is high in developing
countries and is low in poor developed counties. Effective operation
of monetary and fiscal policy is essential to control the inflation.