Inflation ppt
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The document discusses several key definitions and theories of inflation provided by different economists. It is defined as a sustained rise in the general price level over time, caused by an increase in the money supply relative to available goods. The major theories explained are the quantity theory, Keynesian theory, and cost-push theory. Inflation affects the economy through impacts on production, distribution, foreign trade and other channels. It can be controlled through monetary, fiscal and other policies.
Inflation ppt
- 2. “ Inflation is too much of money chasing to few goods.” – Coulbourn. “ Inflation occurs when the general level of prices and cost is rising.” – Prof. Samuelson. “ Inflation as a sustain raise in price.” – Harry Johnson. “ Inflation is the process of price increase.” – Prof. Rowan. Thus, Inflation refers to – “ a rise in the general price level and a corresponding fall in the value of money over a period of time.” “ It is a state in which the value of money is falling i.e. prices are rising.”
- 3. It is a Long term process. It is Dynamic in nature. It is State of Disequilibrium. It is Pure monetary phenomenon. It is Indigenous to the economic system. It is Fostered by economic factors. It is Post full employment phenomenon. It is Rising trend in price. It is Self generating. It involves Scarcity. Inflation is of different types e.g. Open, Suppress, Creeping , Galloping & Hyper. There are different theories about inflation e.g. The Quantity theory, The Cost – Push Theory, Expectation Theory, Keynesian Theory. Inflation is governed by Demand and Supply related factors. Inflation has impact on economic on Economic, Social & Political situation. Inflation can be controlled by various measures like Monetary policy, Fiscal policy, Wage & Price Control, Indexation and Stagflation.
- 4. Formula P (t) = AP (t) x 100 P (T-1) Where, P= Price low level t and t-1 are the time periods.
- 6. Quantity Theory/ Demand – Pull Inflation 2. Keynesian Theory 3. Cost push Theory 4. Expectation Theory
- 7. Factors Affecting Prices on the Demand Side - Rapid Growth of Population. Rise in Incomes. Mounting Government Expenditure . Deficit Financing Role of Black Money © Factors Affecting Prices on the Supply Side - Increase in money supply Erratic Agricultural Growth Inadequate Rise in Industrial Production Hoarding Agriculture Price Policy of the Government Rise in Administered Prices Heavy Taxation Exports and Imports
- 8. A) Economic Effects Production Distribution Foreign Trade Other Stimulation Effect. Loss to Fixed Income Group. Decline in Exports. Decline in Savings Disastrous Effect. Loss to Business community. Increase in Imports. Affects Planning Speculation, Hoarding & Black Marketing Loss to Debtors and creditors. Conspicuous Consumption Resource Misallocation Loss to Investors. Distortion of Budget & Vicious Cycle. Seller’s Market Loss to Farmers. Fall in Exchange Rate Flight of Capital. Lowering of International Competitiveness. Disincentive Effect. B) Socio – Political Effects
- 9. Monetary Policy Fiscal Policy Wage Control Price Control Indexation
- 10. Rishikesh Garude 01 Rutika Dani 02 Sagar Palse 04 Saima Shaikh 07 Achal Sakore 08 Nayan Punj 32