Group presentation

Masab Farooq (10)Fahad Sattar (06)Zaid Ali (29)Bilal Ahmed (05)

Topic Of Presentation(1)Kinds Of

Inflation(2)

Inflation V/S Deflation

Kinds of Inflation(1)On The Basis Of Causes(2) Anticipated V/S unanticipated

inflation(3)On The Basis Of rate Of

Inflation(4)On The Basis Of degree Of

control(5) On The Basis Of Employment

1) On The Basis Of Causes

1)Demand Pull Inflation2)Cost Push Inflation3)Profit Induced Inflation4)Budgetary Inflation5)Monetary Inflation6)Multi Casual Inflation

Demand Pull Inflation:Kinds of Inflation

1)Inflation Caused by increasing in aggregate demand.Factor

1)Increase in money supply.2)Increase in the demand for

goods by the govt.3)Increase the income of various

factor of production.

Kinds of InflationCost Push Inflation:

Increase in cost of production.

Profit Induced inflation:

Entrepreneurs due to their monopoly position raise the profit margin on goods.

Kinds of InflationBudgetary inflation:

Country covers the budget deficits through bank borrowings and creating now money. Purchasing power of community increases without a increase in production of goods.

Monetary inflation:Inflation is caused by too rapid increase in money supply

Anticipated inflation:Rate of inflation which majority of the individuals believe will occur.

Unanticipated inflation:Rate of inflation which comes as a surprise to majority of individuals.

2)Anticipated V/s Unanticipated

3)On the basis of rate of infl ation:

(1)Creeping inflation(2)Walking inflation (3)Running inflation(4)Hyper inflation

Creeping infl ation:(1)General prices level increases upto a rate of 2%

per annum.(2)It is generally considered a necessary condition of

economic growth.

Walking infl ation:The price rise is around 5% annualy.

Running infl ation:The price increases about 8 to 10% per annum.

Hyper infl ation:(1)It starts after the level of full employment is reached.(2)Price level rises very rapidly within a short period.

On the basis of degree of control:

(1)Open Inflation(2)Suppressed Inflation

Open Infl ation:Inflationary process in which prices are permitted to rise without being suppressed by government price control or similar measures.

Suppressed infl ation:(1)Govt. makes efforts to check and control the rise

in price level through price control and rationing.

(2)Suppressed inflation results many evils such as black marketing, hoarding, corruption and profiteering.

(4) On the basis of employment:

(1)Partial inflation(2)Full inflation

Partial infl ation:(1)General Price level raises partly due to an

increase In cost of Production(2)And partly due to rise in supply of money before

the full employment stage is reached.

Full infl ation:(1)Economy reaches the level of full employment.(2)Increase in money supply will result in the rise in

price level without any increase in output and employment.

Inflation vs. deflation

While inflation represents an overall upward price movement of goods and services, deflation acts adversely. We take a look at the basics of both.

Inflation

Inflation is a rise in the general level of prices of goods and services in an economy over a period of time

Effect- An increase in the general level of

prices.- decrease in the purchasing power of the

currency.- High or unpredictable inflation rates are

regarded as harmful to an overall economy.

- make it difficult for companies to budget or plan long-term.

- affect the balance of trade.- negative impacts to trade from an

increased instability in currency exchange prices caused by unpredictable inflation.

Deflation

Deflation is a decrease in the general price level of goods and services.

Deflation occurs when the inflation rate falls below 0% (a negative inflation rate).

Effects Deflation is a problem in a modern economy because it may aggravate recessions and lead to a deflationary spiral.

The effects of deflation are:1 Decreasing nominal prices for goods and services.2 Increasing buying power of cash money and all assets denominated in cash terms.3 May decrease investment and lending if cash holdings are seen as preferable.4 Benefits recipients of fixed incomes.

THE END