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Prof. Wahid Khan delivered this lecture at Indian Institute of Tourism and Travel Management, Bhubaneswar for Macro Economics course. It includes: Inflation, Deflation, Impact, Economy, Definition, Causes, Effects, Value, Money, Demand-pull, Scarcity
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Introduction
Prices 2008 commodity Prices 1956
Rs.15/kg rice 0.30/kg
Rs.12/kg wheat 0.25/kg
300/kg almond 3/kg
8/kg potato 0.20/kg
Intro……………
sItuatIon of rapId general Increase In prIce leVel.
declIne In the Value of Money.
types of InflatIon
deMand – pull InflatIon: due to hIgh gdp and low uneMployMent.
due to adVerse change In prIce of raw MaterIals ( lIke oIl).
Induced By expectatIons Based on preVIous InflatIon leVels.
causes of InflatIon
Increases In Money supply.
expansIon of Bank credIt.
defIcIt fInancIng.
Black Money.
scarcIty.
taxes.
populatIon growth.
deflatIon
a general declIne In prIce often caused By a reductIon In the supply of Money or credIt.
deflatIon can Be caused also By decrease In goVernMent , personal or InVestMent spendIng.
deflatIon has the sIde effect of Increased uneMployMent.
causes of deflatIon
decreasIng Money supply.
IncreasIng supply of goods.
decreasIng deMand of goods.
IncreasIng deMand for Money.
Cont…
Business starts to dry up & employers find themselves cutting down on staff. Our fixed income gets depleted & we find ourselves having to survive on even less. The quality or standard of life that many have grown, downgrades as a direct result of inflation.