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Inflation

Inflation

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Published by sj_mukherjee5506
INFLATION...............A,,,,,,,,,,,,,,,,,,,,,REPORT
INFLATION...............A,,,,,,,,,,,,,,,,,,,,,REPORT

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Published by: sj_mukherjee5506 on May 12, 2010
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08/22/2012

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EXECUTIVE SUMMARY
The one Thing, which is rising Week after Week, Mouth after Mouth andwhich has given the Sleepless Nights to 100 days of Congress Government, whichaffects from Prime Minister to Common Man. YES, IT IS INFLATION. Inflationis commonly understood as a situation of substantial and rapid general increase inthe level of prices and consequent deterioration in the value of money over a periodof time. In other words inflation usually refers to a persistent and rapid rise in thegeneral price level, which reduces the value of money or its purchasing power over a period of time.
ECONOMIC ENVIRONMENT BUSINESS INFLATIONPage 1
 
(A)MEANING:
Inflation is commonly understood as a situation of substantial and rapid generalincrease in the level of prices and consequent deterioration in the value of money over a period of time. In other words inflation usually refers to a persistent and rapid rise in thegeneral price level, which reduces the value of money or its purchasing power over a period of time.
(B)DEFINITION:
According to Crowther,
“Inflation is a state in which the value of money isfalling i.e. prices are rising.”
How to Measure Inflation
 
If the price level in the current year is ‘P1’ & in the previous year is ‘Po’, then inflation for the current year is 
Inflation = P1- Po * 100po
ECONOMIC ENVIRONMENT BUSINESS INFLATIONPage 2
 
FEATURES OF INFLATION
1.Inflation leads to persistent remarkable and continuous rise in general pricelevel.2.Inflation is a scarcity oriented.3.Inflation is a dynamic phenomenon. It is not a state of high prices, but a process of rising prices.4.Inflation is a state of disequilibria. It involves an imbalance betweenaggregate demand and aggregate supply.5. Inflation is a pure monetary phenomenon.
6.
Real inflation takes place only after full employment. So it is a post frillemployment phenomenon.7.Inflation is a longer period phenomenon.
TYPES OF INFLATION
Inflation is often classified on three different criteria. Firstly, one mightdistinguish between various types of inflation on the basis of speed at which thegeneral price level rises. Secondly, one way distinguishes between open andsuppressed inflation. Finally, as we find in the modern macroeconomic theory,inflation is classified on the basis of the factors, which induce it. On the criterion of the rate at which the general price level rises, we have the following types of inflation:1. Creeping Inflation2. Walking Inflation3. Running Inflation4. Galloping or Hyper-Inflation5. Cost-Push Inflation
ECONOMIC ENVIRONMENT BUSINESS INFLATIONPage 3

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