INFLATION

DEFINITION: Inflation is measure of rate of change by the rise in price level. 1-low inflation 2- Galloping inflation. Major inflation creates by Govt. because by the decrease in Govt. expenses inflation rate reduced.

or

An inflation of a currency means the increased supply of money to such an extent that general prices of commodities are raised.

EFFECTS OF INFLATION

1- It increase the profits of organizers

2- It may help increase in productivity

3- Creditors stand to lose.

4- The debtor gains

5- Person with fixed income suffer

EFFECTS DEFLATION

1- It may cause decrease in the profits of organizers

2- It may be a cause of decrease in productivity

3- Debtors stand to lose.

4- The creditor gains

5- Purchasing power of persons with fixed income may increase.

CONTROL OF INFLATION

To control the inflation, two inflationary measures can be considered as under:-

1- Administrative measure(Incentive to purchaser, Rationing system, price control, Fair price shops & utility store, liberal import policy.

2- Monetary measures (Bank rate policy, open market, operation, selling& purchasing in open atmosphere.

  1. Fiscal measures(Curtail in Govt. expenses, Taxes variation increase in production & export)