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Meaning of Inflation
A general increase in prices of all the Commodities.

Theory of inflation:-

Classical theory of inflation

Inflation occurs in direct proportion to increase in money supply.

Neo-classical theory of inflation

Increase in demand for money as the cause of inflation.

Keneysian theory of inflation

Increase in AD due to increase in due to real factor.

Monetarist view of inflation

General level of price rises only due to an increase in money supply.

Modern theory of inflation

Theory of price discrimination

DEFINITION

According to Crowthers inflation means a state in which the value of money is falling ie prices are rising.

According to Pigou, inflation arises when money income is expanding more than proportionate to income earning activity.

According to Samuelson inflation occurs when general level of prices and cost are rising.

Types of Inflation
Demand Pull Inflation ( Due to high GDP and Low Unemployment).

Cost Push Inflation ( due to adverse change in price in raw materials). Ex-oil
Adaptive inflation/buit in inflation
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22/JAN/2009 RS=28-35 22/JAN/2010 RS=80-94

22/JAN/2009 RS= 7-10 22/JAN/2009 RS=16-24

22/JAN/2009 RS=22/KG 22/JAN/2010 RS=52/KG

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Types of inflation:Open inflation Suppressed inflation ACCORDING to the nature of time period of occurrence:1.war time inflation 2.post war inflation 3.peace time inflation
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Types of inflation:According to the cause:currency inflation Scarcity inflation Deficit inflation Profit inflation

Tax inflation
Cost inflation Demand inflation
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Zimbabwe as the highest inflation rate (consumer prices) (%) in the WORLD which reaches 26,470 which is ridiculously high as that is 10,000 times the inflation here in the UK

Measurement of Inflation

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Anti inflation measures:Fiscal measures

Monetary measures

Antiinflation

Price and wage control

indexation
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Monetary measures
Traditional
Bank rate policy Variable reserve ratio Open market operation

Non-traditional
SLR Moral Suasion Selective Credit Control Credit authorization scheme CAS

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Fiscal measures:Taxations of income

Cut Government expenditure

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Price and wage control:-

Price control Wage control

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Indexation
Indexing is a mechanism by which wages, prices,

and contracts are partially or wholly compensated for changes in the general price level.

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THANK YOU:-

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