BUILDING ECONOMICS

AND SOCIOLOGY
ASSIGNMENT
 INFLATION
“a general increase in prices and fall in the purchasing value of money.”

In economic, inflation is a sustained increase in the general price

levels of goods and services in an economy over a period of time.

 When the general price level rises, each unit of currency buys fewer
goods and services; consequently, inflation reflects a reduction in
the purchase power per unit of money – a loss of real value in the
medium of exchange and unit of account within the economy. 

The opposite of inflation is deflation, a sustained decrease in the

general price level of goods and services. The common measure of
inflation is the inflation rate, the annualised percentage change in a
general price index, usually the consumer price index, over time
EFFECTS OF INFLATION
 IMPORTANT TERMS
• PRODUCER PRICE INDICES (PPIs) :which measures average changes in prices received by domestic
producers for their output.

• COMMODITY PRICE INDICES, which measure the price of a selection of commodities.

• CORE PRICE INDICES: most statistical agencies also report a measure of 'core inflation', which
removes the most volatile components (such as food and oil) from a broad price index like the CPI.

• GDP DEFLATOR is a measure of the price of all the goods and services included in gross domestic
product (GDP).

• REGIONAL INFLATION The Bureau of Labor Statistics breaks down CPI-U calculations down to
different regions of the US.

• HISTORICAL INFLATION Before collecting consistent econometric data became standard for

governments, and for the purpose of comparing absolute, rather than relative standards of living,
various economists have calculated imputed inflation figures. Most inflation data before the early
20th century is imputed based on the known costs of goods, rather than compiled at the time. It is
also used to adjust for the differences in real standard of living for the presence of technology.

• ASSET PRICE INFLATION is an undue increase in the prices of real or financial assets, such
as stock (equity) and real estate.
 INTEREST RATE

An interest rate is the percentage of principal charged by

the lender for the use of its money.

The principal is the amount of money loaned. Since banks

borrow money from you (in the form of deposits), they also
pay you an interest rate on your money.

The annual interest rate is the rate over a period of one

year. Other interest rates apply over different periods, such
as a month or a day, but they are usually annualised.
FACTORS AFFECTING
INEREST RATE
 EMPLOYMENT
It is a situation in which a person goes for work for a fixed
period of time for a particular and gets salary in return.
NATURE OF EMPLOYMENT
Nature of employment in India is multi faceted.Some gets employment throughout the year.Some are employed for only a few months a
year. Many workers do not get the fair wages.

TYPES OF WORKERS

Regular salaried employees

Self-employed

Casual wage labourers

types of sectors

Formal/organised Sector

Informal / un-organised sector

FEATURES OF INFORMAL SECTOR
Absence of official protection and recognition.

Non coverage by minimum wage legislation and social security system.

Predominance of own-account and self-employment work.

Absence of trade union organisation.

Low income and wages.

Little job security.

No fringe benefits from institutional sources.

FEATURES OF FORMAL SECTOR

Follows labor laws (protect the rights of workers)

Having fixed working hours

Fixed salary

Workforce from trade unions

Medical leaves

Future security

Skills are required

 SAVING AND
INVESTMENT
Saving and investing often are used
interchangeably, but there is a
difference. Saving is setting aside
money you don't spend now for
emergencies or for a future
purchase. ... Investing is buying assets
such as stocks, bonds, mutual funds or
real estate with the expectation that
your investment will make money for
you.
When in a year planned investment is larger than
planned saving, the level of income rises. At a higher level
of income, more is saved and therefore
intended saving becomes equal to intended investment.
On the other hand, when planned saving is greater than
planned investment in a period, the level of income will
fall.
 MONETARY SYSTEM
A monetary system is the set of institutions by which
a government provides money in a country's economy.
Modern monetary systems usually consist of the
national treasury, the mint, the central
banks and commercial banks

Monetary policy is the policy adopted by the monetary

authority of a country that controls either the interest
rate payable on very short-term borrowing or the money
supply, often targeting inflation or the interest rate to
ensure price stability and general trust in the currency.
CONVENTIONAL INSTRUMENT

The central bank influences interest rates by expanding or

contracting the monetary base, which consists of currency in
circulation and banks' reserves on deposit at the central bank.
Central banks have three main tools of monetary policy: open
market operations, the discount rate and the reserve requirements.

UNCONVENTIONAL MONETARY POLICY AT THE ZERO BOUND

Other forms of monetary policy, particularly used when interest

rates are at or near 0% and there are concerns about deflation or
deflation is occurring, are referred to as unconventional monetary
policy. These include credit easing, quantitative easing, forward
guidance, and signaling.
 FISCAL SYSTEM
Fiscal policy is the means by which a government adjusts its spending levels
and tax rates to monitor and influence a nation's economy. It is the sister strategy to
monetary policy through which a central bank influences a nation's money supply.

OBJECTIVES OF FISCAL POLICY

To Achieve Equal Distribution of Wealth Increase in Savings Degree of inflation

To Achieve Economic Stability Price stability

DEFICIT POLICY Deficit Financing refers to financing the budgetary deficit. Budgetary deficit here means expenditure
over government income. It means "Taking loans from reserve bank of India by the government to meet excess of government the
budgetary deficit". • Reserve bank gives loans by issuing new currency notes. Increase in money supply leads to fall in value of
money. Fall in value of money in turn leads to increase in price level.

TAXATION POLICY Taxes are the main source of revenue of government. • Government levies both direct and indirect
taxes in India. • Direct taxes are those which are directly paid by the assesses to the government i.e. income tax, wealth tax etc.
Indirect tax are paid indirectly by the public to the government i.e. excise duty, custom duty, VAT etc. • Direct tax are progressive
in nature. Indirect tax are not progressive. The main objectives of taxation policy are: (1) Mobilisation of resources, (2) To promote
saving, (3) To promote saving (4) To bring Equality of income and wealth
 BIBLIOGRAPHY
wikipedia.com

businesstoday.in

investopedia.com

economichelp.org

sociologygroup.com

thebalance.com

tradingeconomics.com
THANK YOU

U. SAI PRAKEERTHI
17041AA101
SEC-C SEM-6