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Economics For Managers - Session 18

Economics For Managers - Session 18

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Published by Abimanyu NN
ECONOMICS FOR MANAGERS
ECONOMICS FOR MANAGERS

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Categories:Types, Business/Law
Published by: Abimanyu NN on Oct 19, 2011
Copyright:Attribution Non-commercial

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10/11/2014

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PSG INSTITUTE OF MANAGEMENT
MBA 2011-13 BATCHI Trimester
Session XVIII- For Batch C and DBusiness Decisions and Government -4-Inflation
ECONOMICS FOR MANAGERS
 
Inflation
We saw in the 15
th
session what inflation is.
Inflation happens when the AggregateDemand curve gets shifted to the right dueto whatever reasons and in that processpushing up the general price level. If theAggregate Demand curve keeps shiftingmonth after month the economy will sufferfrom inflation.
Inflation is an increase in the price of abasket of goods and services that isrepresentative of the economy as a whole.
18th October 20112EFM Faculty P.Uday Shankar
 
Two ways of looking at inflation
1.
Inflation in economic terms is the percentage bywhich demand is higher than the supply. Forexample, if the inflation rate is 5% for aparticular item, it means that the demand is 5%more than the total supply of that particularitem.
2.
Inflation can also be defined as an increase inthe general level of price of goods and servicesover a period of time. It is measured as anannual percentage increase and is a majorconcern for common people. It negativelyaffects the purchasing power of money as youcan buy less of goods and services with sameamount of money.
18th October 2011
 
3EFM Faculty P.Uday Shankar

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