INFLATION

By ANANYA SINGH XI-D

INFLATION IS A TAXTION WITHOUT LEGISLATION.

INTRODUCTION

INFLATION IS THE SITUATION OF RAPID GENERAL INCREASE IN PRICE LEVEL

DECLINE IN THE VALUE OF MONEY

EFFECTS OF INFLATION ON THE ECONOMY:

KINDS OF MEASURING INFLATION

Producer price Index

Wholesaler price Index

Consumer price Index

INFLATION IS THE EVERYONE’S ILLUSION OF WEALTH.

CAUSES OF INFLATION Increases in Money

supply Expansion of Bank Credit Deficit Financing Black Money Scarcity Taxes Population Growth

NEGATIVE EFFECTS OF INFLATION

Hoarding Distortion of relative prices Existing creditors will be hurt Fixed income recipients will be

hurt Lowers National saving Illusion of making profits Currency debasement

POSITIVE EFFECTS OF INFLATION

Benefit the InflatorsBenefit the CartelsBenefit the Borrowers who pay Fixed Interest

GOVT. IS THE ONLY INSTITUTION THAT CAN TAKE A VALUABLE COMMODITY LIKE PAPER AND MAKE IT WORTHLESS BY APPLYING INK TO IT.

IMPACT OF INFLATION ON INDIVIDUAL

YEAR 2008 2009 2010

SALARY 8000 8500 9000

EXPENSES 7000 8500 10000

SAVINGS 1000 0 -1000

INFLATION IS SIN ; EVERY

GOVT. DENOUNCES IT & EVERY

GOVT. COMMITS IT.

MEASURES TAKEN BY GOVERNMENT

MONETARY MEASURES Bank rate Policy Open Market Operation Variable Reserve Ratio Credit Rationing

FISCAL MEASURES Increase Public Borrowing Decrease Public Expenditure

REALISTIC MEASURES Increase the supply of Goods and Services Price ControlPolicy

THE END .