Inflation Causes, Effects & Measures
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Transcript of Inflation Causes, Effects & Measures
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INFLATION
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LEAD TO INFLATIONSustained Rises in
weighted average of all prices
General Increase in Prices
More Focus on Rise in Prices, less on
causes
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INFLATION
DECLINING LIVING STANDARDS
WORTHLESS MONEYDEVALUATION OF
CURRENCY
ECONOMIC COLLAPSE
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TYPES OF INFLATION
aggregate demand for final goods exceeds
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COST PUSH INFLATION
higher cost of production and
material
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Measures of inflation
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Bank Rate Policy
Central Bank Raises Bank Rates
Flow of money from commercial banks to public narrowed
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Cash Reserve Ratio
Increase in CRR reduce the cash with commercial banks
Leads to• Low supply of currency in market • Higher rate of interest & low inflation
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Effects of InflationGainers-
Businessmen + Farmers + Shareholders + Government + Debtors
Losers - Creditors + Wage Earners + Pensioners + Students + Bondholders
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Rate of Inflation in Different Countries
Saudi Arabia
United States of America
Venezuela Japan Egypt Russia Spain UAE Greece Iran Syria
2.8
1.1
57.3
1.5
9.86.2
-0.2
1.8
-1.1
28.8
49.5
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Thank [email protected]