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Inflation

Inflation. What is inflation?. Considerable Persistent Rise in general price level Over long period of time What is considerable rate of inflation?. Measure of Inflation. Measuring inflation through PIN Rate of inflation = PIN t – PIN t-1 / PIN t

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Inflation

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  1. Inflation

  2. What is inflation? • Considerable • Persistent • Rise in general price level • Over long period of time • What is considerable rate of inflation?

  3. Measure of Inflation • Measuring inflation through PIN • Rate of inflation = PINt – PINt-1 / PINt • Measuring inflation by GNP Deflator = Nominal GNP / Real GNP

  4. Types of Inflation • Moderate inflation/creeping inflation (single digit) • Galloping Inflation – double or triple digit • Hyper inflation – more than three digit • Open and suppressed inflation • Demand pull inflation • Cost push inflation • Wage push inflation • Profit push inflation • Supply shock inflation

  5. The economic impacts of Inflation • Inflation and distribution of income • Effect on distribution of wealth • Wage earners • Producers • Fixed income class • Borrower and lenders • Government • Effect of inflation on economic growth • Effect of inflation on employment

  6. Measures to Control Inflation • Monetary measures • Bank Rate • Variable reserve ratio • Open market operations • SLR • Selective credit controls • Moral suasion Fiscal Measures • Government expenditure • Taxation • Private investments • Price and wage control • indexation

  7. Thanks

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