Inflation
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Transcript of Inflation
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Muhammad Zubair 7170Gcuf banking and finance
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Inflation?Inflation?
Continuous Continuous riserise inin
pricesprices
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Types of Types of Inflation Inflation according according to to RATE RATE
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““When the rise in When the rise in prices is very low prices is very low like that of a snail like that of a snail
or creeper, is or creeper, is called Creeping called Creeping
Inflation”Inflation”
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Prices rise Prices rise moderatelymoderately
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Prices rise rapidlyPrices rise rapidly
Also called Runway or Galloping inflationAlso called Runway or Galloping inflation
Immeasurable and uncontrollableImmeasurable and uncontrollable
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Prices rise very fast Prices rise very fast at double or triple at double or triple digit rate.digit rate.
Also called Runway Also called Runway or Galloping or Galloping InflationInflation
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1.1. Demand pull Demand pull causescauses
2.2. Cost push causesCost push causes
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Demand Pull InflationDemand Pull Inflation
When the aggregate When the aggregate demand increases demand increases
more than the more than the supply.supply.
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Demand pull causesDemand pull causes
• High monetary expansionHigh monetary expansion
• Increase in wagesIncrease in wages
• Increase in populationIncrease in population
• HoardingHoarding
• Foreign remittancesForeign remittances
• WarsWars
• Natural calamitiesNatural calamities
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Cost push InflationCost push Inflation
When cost of production increases the When cost of production increases the price level automatically increases.price level automatically increases.
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Cost push causesCost push causes
Increase in indirect Increase in indirect taxestaxes
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Increase in prices of raw Increase in prices of raw materialmaterial
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Devaluation of moneyDevaluation of money
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1.1. Monetary MeasuresMonetary Measures
2.2. Fiscal MeasuresFiscal Measures
3.3. Realistic MeasuresRealistic Measures
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Monetary MeasuresMonetary Measures
• Bank rate policyBank rate policy
• Open market operationOpen market operation
• Variable reserve ratioVariable reserve ratio
• Credit rationingCredit rationing
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Fiscal measuresFiscal measures
• Public borrowingPublic borrowing
• Public revenuesPublic revenues
• Public expenditurePublic expenditure
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Realistic or Other measuresRealistic or Other measures
• Population planningPopulation planning
• Price control policyPrice control policy
• Political stabilityPolitical stability