INFLATION

INFLATION

 @ Define :-

   inflation is a situation of persistent and appreciable rise in prices , leading to fall in purchasing power of money

@ Types :-

i)  Creeping type :-

      when rate of inflation is maximum

ii) Galloping Inflation :-

          Here inflation price icreased 8-10%

iii) Hyperinflation :-

          here that condition price goes out of control

iv) Open :-

       Here Prices rises but they are not controlled by government

v)  Suppressed Inflation :-

       prices rises but condition under controlled when government take part in

vi) Stag type :-

        Here Stagnation also contribute their effect with inflation

vii) Demand pull Inflation :-

        these arises when there was excess amount of demanf than supply, causes for these are
* expand public expenditure
* Monet supply inresed
* Black money also play great role

viii) Cost Push Inflation :-

        these arises due to fact that rise in price is happen due to rise in cost of production, these are have many causes are
- High Margin In Profit
-  falls In Supply of material accordingly raise in price
- Higher Taxes Value
- High Wage also play critical role

# Causes :-

  There are three amin reason ,are

i) Demand Factor :-

      increased population mean increase demand result pull inflation

ii) Rise In employement :-

           rise employement mean rise in demand , results demand pull inflation

iii) Irregular Agricultural Supply :-

           Natural calamities like drought may cause cost-push inflation

iv) Inadequate growth :-

        as industries grows it leads cost-push inflation

v) Import price :-

            Rise In pricesa Leads Cost push Inflation

@ Adverse Effects :-

* Black marketing :-

        where distributer holds good till it prices incesed or dell it at time of high prices
* Speculation Demand May cause adverse effect

* Wasteful allocation of resaoources :-

            creates rigidity in smooth working price mechanism

@ Policies to measures control inflation :-

             these policies help getting control on demand and help in increase supply so thant balanace in demand and supply would be maintained
- For achieving these goal RBI with Central bank empowered to create credit creation council   these work as that at time of excess demand RBI uses various monetary policies to restrict availaibility of credit which are based on three prospective are

i) Quantitative Instruments :-

       these are those which effect amount of whole economy, These help in Raised In bank rate , Helping Commercial banksd To Do Open Marker Operation , And also help in raising Cash reserve ratio

ii) Qualitative Intruments t:-

            these are those factor having selective intruments which effect amount of credit in specific areas which help in raising Marginal requirements

iii) Moral Suasion :-

          which help to grand loan for essential purposes

@ Reduced Budget Deficit :-

       Government do various policy To deficit situation of excess xpenditure , the instrument of fiscal policy used control inflation are

i) Revenue Policy :-

      In Excess Demand government raises prices of taxes

ii) Expenditure Policy :-

        Here main focus on Defence, Civil administration, Social services help in reduces expenditure result fall in demand
iii) Contraol on prices
iv) Wage freeze
v) Population Control measures
vi) Increase supply of good
vii) Public Distribution of Essential good