Essay of 200 words on inflation

Inflation in layman terms

This factor sets new dimensions and ideas of reason around the world and in all the fields of human social ability and capability; especially in the field of politics wherein this influence and beliefs can be overwhelming to a point that everyone will be agreeing to reasons and beliefs while making crucial decision that will affect millions of lives living in the state The rate of interests has been increased in order to encourage savings and withdraw of currency. A low rate of capital formation hinders economic growth. It will directly leads to the devaluation of paper money. We know that hyperinflation discourages savings. Keeping costs down has assisted the US economy in balancing the control of inflation better than other countries emerging from the global recession, such as China and Europe. After a couple of weeks, imagine going into these stores and noticing the prices have steadily increased over the past few months. Thus public takes wrong way of not paying taxes and there will be escalation in prices. One can study the effects of unanticipated inflation under two broad headings: i Effect on distribution of income and wealth ii Effect on economic growth.

Anyway, CPI stems from the leftward shift of the aggregate supply curve. Inflation is the widespread and sustained increase in prices of goods and services in a country.

causes of inflation

The analysis looks into the macroeconomic issues that affects economics. As a result of current events, it might be practical to take into account the next phase the economy will be in.

Effects of inflation essay

A policy designed to accelerate the rate of economic growth may result in a higher rate of inflation and balance of payment deficit On the other hand, people earning flexible incomes may gain during inflation. If the annual rate of inflation in an economy is anticipated correctly people will try to protect them against losses resulting from inflation. When the unemployment rate starts going up inflation goes down and vice versa. When the price level rises, each unit of a currency purchases fewer goods and services, reflecting a reduction in purchasing power per unit of currency. This means that these two factors are inversely related because when one goes up the other goes down. Such investment is referred to as unproductive investment. Decreases; decreases Unemployment and inflation do coexist and inflation causes much unemployment which would cease with it. Creeping or Mild Inflation: If the speed of upward thrust in prices is very low then we have creeping inflation. Again, there is a tendency on the part of the holders of black money to spend on conspicuous consumption goods. Inefficiency, corruption, mismanagement of the economy may also be the other reasons. Over time, the financial innovation of credit arose, and sparked a major advancement to economic development. Because of globalization the world is more interconnected than ever and in turn no economy is fully insulated from disruptions to the global markets.

This is true for all other commodities. If increase in money wages exceeds labour productivity, aggregate supply will shift upward and leftward. If this is not done then this is not the effect of stopping inflation Some are natural factors like unfavorable weather conditions which affect the food production and lead to the shortage of commodities in the market.

Essay of 200 words on inflation

Thus we have two important variants of CPI: wage-push inflation and profit-push inflation. Former leads to a rightward shift of aggregate demand curve while the latter causes aggregate supply curve to shift leftward.

What is inflation

But it is difficult to make the price rise of a creeping variety. Inflation in the other hand is the rise of prices of products and services. An individual may be interested in buying a house by taking a loan of Rs. Thus, there is no strict relationship between prices and output. The value of the German mark became next to nothing, and people ended up having to trolley wheel-barrows full of money just to buy a loaf of bread. Running inflation is dangerous. C ABSTRACT: India is one of the trillion dollar economy in the world and known for its unique qualities which is turning itself into a hot destination for foreign investors and there are also certain problems which is retarding its economic growth as of today among many major economic problems INFLATION is also one and in past recent months it went to double digit also. From brainyquote, while the anticipated money and drinking. When the prices of good rises in a market economy each unit of currency would buy fewer good and services than before. To measure inflation growth, we use indexes, which reflect the percentage growth of a weighted basket of goods. A low rate of capital formation hinders economic growth. It is an extreme form of inflation when an economy gets shattered. Adjusted for economic changes and price has considerably decreased and institutions on amazon.

The Filipino country is a topical marine with monsoons from the north east from November through April and from the southwest from May to October. Thus, during inflation of anticipated variety, there occurs a diversion of resources from priority to non-priority or unproductive sectors.

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Essay about The Philippine Inflation this Year