Sunday, September 28, 2014

Inflation : Meaning, Types, Causes and Measures to check it

Meaning : Inflation refers to a persistent upward movement in the general price level. It results in the decline of purchase power..

Types of Inflation
(a) Demand Pull Inflation : When demand for goods and services is more than their supply, their price rise. Such price rise is called demand pull inflation.

(b) Cost Push Inflation :Cost Push inflation refers to a situation where prices persistently rise because of growing factor costs.

(c) Stagflation: The combined form of demand pull inflation and cost push inflation. During the period 1990-94, high inflation occurred in India, in which the economy was stagnating.

Causes of Inflation in India:
  • Increase in public expenditure
  • Deficit Financing
  • Erratic agricultural Growth
  • Agricultural price policy of the government
  • Inadequate rise in Industrial production
  • Upward revision of administered price
Measures to Check Inflation
Inflation is a phenomenon where money income or purchasing power is rise faster than the real goods and services. Some steps to check Inflation are listed below:
  • Monetary Measures
  • Fiscal Measures
  • Control over Investment
  • Other Measures

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