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Inflation

about inflation , effect, theory, control, Control Measures
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Inflation

  1. 1. Inflation - Mayur Khatri (2027)
  2. 2. Contents : A glimpse of what is to come •Meaning and Definitions •Types of Inflation •Theories and causes of Inflation •Effects of Inflation •Control Measures •Present Scenario
  3. 3. Definitions : What is Inflation? “Inflation is an increase in the quantity of purchasing power.”– Gregory Inflation is the stage of too much money chasing too few goods.”-- Coulbourn Meaning : Inflation is considered a global phenomenon. It takes place because of rapidly rising prices of goods and services, resulting in the decline of the value of money. The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.
  4. 4. Types of Inflation -Creeping Inflation -Walking or trotting Inflation -Running Inflation -Galloping Inflation -Hyper Inflation
  5. 5. Theories and Causes of Inflation The main cause of inflation is the increase in the demand of goods and services and at the same time decrease in the supply of goods and services. There are two theories related to the causes of inflation: Demand-pull (when there is excess demand), and Cost-push (when costs rise)
  6. 6. Theories and Causes of Inflation  Demand Pull Inflation – This occurs when there is excess aggregate demand in the economy (overall) or in a specific market or industry. Businesses respond to high demand by raising prices to increase their profit margin
  7. 7. Theories and Causes of Inflation  Cost – push Inflation : This occurs when costs of production or operation are increasing.  Cost Push inflation is mainly caused due to the following factors: · increase in wages. · increase in cost of raw materials · increased cost of imported components (import-push inflation)
  8. 8. Effects of Inflation Effect depends on the speed of inflation and the nature of the economy.  Rising prices of imports  Lowers national saving  Redistribution of Income & Wealth  Collapse of Monetary system  Adverse impact socially and politically  Discourages Investment & savings  Higher Interest / Income tax rates
  9. 9. Control Measures
  10. 10. Monetary Policy: Monetary Policy essentially implies the policy followed by financial institutions. High interest rates and slow growth of the money supply are the traditional ways through which central banks fight or prevent inflation.
  11. 11. Fiscal Measures Reduction in unnecessary expenditure. Increase in Taxes. Increase in savings Adopt Surplus Budget(collecting more revenue and spending less). Stop Repayment of Public Debt until inflationary pressures are controlled.
  12. 12. Other Measures
  13. 13. Present Scenario COUNTRY CATEGOR Y DATES ACTUAL HIGHEST INFLATIO 1969 – 6.46 N RATE 2013 The inflation rate in India was recorded at 6.46 % in September-2013. INDIA From 1969 until 2013, India Inflation Rate averaged 7.7% Highest 34.7%September -1974 Lowest -11.3 % in May -1976 The average inflation of India in 2013: 11.04 % 34.68 LOWEST -11.31 UNIT PERCENT FREQUENCY MONTHLY
  14. 14. Thank You

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