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TRANSCRIPT
Inflation
It’s price is
increases
How is it possible
It’s quality is as same as previous
Introducti
on
Shopkeeper
customer
Inflation is a rise in the general level of prices of goods and services in an economy over a period of time
Is it positive or negative ?
Causes of inflation
Are there affected on economy ?
How it calculated?
Is it Need in economy?
How inflation calculated
• Method of calculationWholesale Price Index (WPI)
Consumer Price Index (CPI)
110-100 x 100 100
Formula:
price at end of year – price at beginning of yearX 100WPI of beginning of year
Current price
Previous price
Previous price
Wholesale Price Index (WPI)
WPI is the index that is used to measure the change in the average price level of goods traded in wholesale market .
Formula:
WPI at end of year - WPI at beginning of yearX 100WPI of beginning of year
Consumer Price Index (CPI)
CPI is a statistical time-series measure of a weighted average of prices of a specified set of goods and services purchased by consumers.
Causes of inflation
Expansion of Money SupplyIncrease in Disposable Income
Increase in Indirect Taxes
Drop in exchange Rate
Rising Population Natural Calamities Speculation and Black Money
Unfair Practices by Monopoly Houses
Bottlenecks and Shortages
Non-monetary Factors
Effects of Inflation
Positive Effect
•Benefit the cartels formed by the companies•Benefit borrowers•Farmers Gain In Inflation
Negative Effect
•Lowers national saving•Rising prices of imports•Income diffusion effect•Illusions of making profits
Need of inflation
At the time it not caught we
will try.
It help to growth.
Affect on Economy
1.MonetaryMeasures
•Bank rate policy•Statutory Liquidity Ratio•Open market operation * Repo rate•Reverse repo rate * Cash Reserve Ratio
2.FiscalMeasures
• Taxation• Government expenditure• Public borrowings• Protectionist measures
3.OtherMeasures
• To Increase Production• Price Control
"Inflatio
n is the w
ay of g
rowth ."