Date post: | 06-May-2015 |
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2. What is inflation???
Inflationisthestatewhenthevalueofmoneyis fallingandthereisanupward
rise inpricelevel.
Too much of money chasing, but very few goods.
For example, if the inflation rate is 5% for a particular item, it
means that the demand is 5% more than the total supply of that
particular item.
3. Types of inflation
Demand pullInflation .
Cost push inflation.
Pricing powerinflation.
Skewinflation .
4. Demand pull inflation
When demand grows faster than supply it pushes general pricesup.
This can be described as too much moneychasing toofew goods.
India beingagrowingeconomy has experienced this type of Inflation
for years. Almost all industriesin India face demand pull inflation
especially when it comes to the technology driven industry like
Automobile,Consumer Electronics.
5. 6. Cost push inflation
Cost-push inflationis atype of inflation caused by substantial
increases in the cost of Important goods or serviceswhere no
suitablealternative is available.
A situation that has been often cited ofthis was theoil crisis of
the 1970s, which some economists see as a major cause of the
inflation experienced in theWesternworldin that decade.
7. 8. Pricing power inflation
This type of inflation is caused by businesshouses whotend
toincreasepricestoincrease their profitmargins. It is more common
inoligopolisticeconomies.
skew inflation
This term has beencoinedobservingthe unusualinflationwherein
therewas huge inflationin the food sector with the
non-foodsectorremaining moreor less constant.
9. Factors affecting inflation
Increase in money supply.
Increase in exports.
Black money.(fake currency).
Increase in public expenditure
Decrease in theaggregate supplyof goods and services.
10. how is inflation measured??
A measure of price changes in consumer goods and services such as
gasoline,food,clothing and automobiles. the CPI measures price
change from the perspective of a consumer.
A family of indexes that measure the average change over time in
selling prices by domestic producers of goods and services. PPI
measures price change from the perspective of a seller
11. How to control inflation??
12. Problemsduetoinflation
When the balance between supply and demand
Goes out of control, consumers could change their buying habits,
forcing manufacturers to cut down production.
Price increase can worsen the poverty affecting the low income
household
Producers will not be able to control the cost of raw material and
labor and hence the price of the final product, which results in
less profit or in some cases no profit, forcing them out of
business
Manufactures will not have an incentive to invest in new equipment
and technology
13. How inflation is a threat to Indian economy
14.
15. The global economic crisis saw many economies stumble but India rebounded faster and was surging ahead with a growth rate of 9%. But the inflationary pressure is forcing the government to adopt measures which are taking the steam out of the Indian growth story.