Slides on Inflation http://www.techfired.com

1. Topic: Inflation

2. Arslan Waseem
Muhammad Owais
Muhammad Bilal
Hussnain Manzoor
Khalil Yousaf
Fahid Ali

3. Inflation is a state in which the value of the money is
falling and the prices are rising and this is the bad
situation for any country to get themselves into the
balance and for the person as a single as well.
Another definition we have of inflation is this
“Inflation occurs when the general level of pries and
cost is rising”,
You can say that “Too many dollars chasing too few
goods”.
What happens during Inflation
Oil/Petrol prices rises.
CNG Prices rises.
Paddy/Wheat prices rises.
The main one is this that the salary is not too much
too meat the common needs of life for a common
person.

4. Inflation makes some people worse off, but it makes others
better off
Ex: 1. Increase in Gasoline prices affect the Truck drivers
more but barely affects people who go to there work by
walk and economy vehicles
2. College tuition fees has risen almost twice as fast as
average prices over the past 10 years, which hurts you a
lot,but may have little impact on a married couple with no
children.
3. Poultry diseases causes a rise in the prices of Non-veg
food items and affect people who eats more of Non- veg
food items but it barely affects people eating Veg food.
4. People in Cities get affected more than people in small
towns and villages

5. Prices for goods and services mean income for some
people. So, as some prices increase faster
than other, some people’s income increase faster than
others.
Ex: 1.Due to increase in number of automobiles working
on Gasoline increased, due to this most of the Oil companies
record very high amounts of improvements in profits
every year
2. Due to ever increasing in pollution, the number of
people suffering from different diseases also increased which
gave
chance to many pharmaceutical companies to improve
profits every year
3. All the retail stores working on % profit’s increase
there income when ever there is increase in prices of goods

6. 1. Inflation redistributes income between Borrowers and
Lenders
2. Inflation benefits the borrowers and hurts the lenders
Reason: As the value of money decreases at higher
rate

7. Demand and Supply
Prices rises whenever either more demand for the good
or when there is the shortage of the supply for that good.
Types of Inflation
Demand Pull Inflation
Cost Push Inflation

8. It is the situation occurs when the ability of
the people to spend rises more rapidly than
the availability of the good or services.

9. In the diagram AD shifts to AD’ because of increase in the demand and that
result in the increase of price level from P to P’ and increase of real GDP
from Y to Y’.

11. This is the situation occurs when the rising
costs results in increase in the prices of the
goods and services.
There are two main sources of increased
costs
An increase in the money wage rate
An increase in the money price of raw
materials, such as oil.

12. In the above diagram SRAS shifts to SRAS’ because of decrease in supply & that
result in increase of price level from P to P’ & decrease of real GDP from Y to Y’.

13. The Control of Inflation:
Monetary measures:
Classical economists are of the view that inflation can be checked by controlling
the supply of money. Some of the important monetary measures to check the
inflation are as under:
Control over money:
It is suggested that to check inflation government should put strict restrictions
on the issue of money by the central bank.
Credit control:
Central bank should pursue credit control policy .In order to control the credit it
should increase the bank rate, raise minimum cash reserve ratio etc. It can also
issue notice to other banks in order to control credit
Other measures
Increase in the production:
One of the major causes of the inflation is the excess of demand over supply ,so
those goods should be produced more whose prices are likely to rise rapidly .In
order to increase production public sector should be expanded and private sector
should be given more incentives.
Proper commercial policy:
Those goods which are in scarcity should be imported as much as possible from
other countries and their export should be discouraged.
Encouragement to savings:
During inflation government should come out with attractive saving schemes. It
may issue 5 or 10 year bonds in order to attract savings.

15. In Pakistan, most important categories in the
consumer price index are food and non-alcoholic
beverages (35 percent of total weight); housing,
water, electricity, gas and fuels (29 percent);
clothing and footwear (8 percent) and transport (7
percent). The index also includes furnishings and
household equipment (4 percent), education (4
percent), communication (3 percent) and health (2
percent). The remaining 8 percent is composed by:
recreation and culture, restaurants and hotels,
alcoholic beverages and tobacco and other goods
and services. This page provides - Pakistan
Inflation Rate - actual values, historical data,
forecast, chart, statistics, economic calendar and
news.

17. Pakistan is also a failed nation with respect to political
leadership. No leadership has ever come with honest
intentions. Every person took the charge of higher rank
and robbed this country as much as he could. But some
of them were capable enough to make economy look
good.
The inflation rate of Pakistan during PPP regime is as
follows: during 2007-08, it was 19.27, 2008-09 it was
14.39, 2009-10 it was 13.07, 2010-11 13.23 and in
ongoing fiscal year it is 10.1.
Inflation rate and GDP comparison shows that despite
of constant investment as claimed by govt. inflation
rate is on rise and GDP rate is on decrease. This shows
how PPP has spent these four years of her regime.
Indeed corruption is the only thing this govt. did
honestly.