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Project of Inflation (Economic)

The document discusses inflation, which refers to generally rising prices of goods and services within an economy over time. It outlines different types of inflation including demand pull inflation caused by increased demand and cost push inflation caused by increased costs of production. The document also notes that a mild level of inflation is essential for economic growth.

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kausar
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16 views

Project of Inflation (Economic)

The document discusses inflation, which refers to generally rising prices of goods and services within an economy over time. It outlines different types of inflation including demand pull inflation caused by increased demand and cost push inflation caused by increased costs of production. The document also notes that a mild level of inflation is essential for economic growth.

Uploaded by

kausar
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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INTRIDUCTION OF INFLATION

Inflation is an economic term that refers to an environment of generally rising


prices of goods and survices within a particular economy. As general prices
rice, the purchasing power of consumers decreases. The measure of inflation
over time is referred to as the rate of inflation. Commonly, people may refer to
inflation as the rising of living.

Example; prices for many consumer goods are double that of 20 years ago.
When you hear your grandparents recall, a movie and a bag of popcorn only
cost a buck-twenty-five when I was your age they are making an observation
about inflation the rising cost of goods and services over time, and the
decrease in the purchasing power of the dollar

TYPES OF INFLATION
1) Demand pull inflation
2) Cost push inflation

DEMAND PULL INFLATION


Demand pull inflation occur when total demand increase then total supply
so ultimately aggregate demand with increase. It well pulls the price to rise.

COST PUSH INFLATION


It occurs when prices of factor of production will increase push the cost of
product on rise so, to cover the high cost produces will increase prices of
product.

IMPORTANCE OF INFLATION
1) A mild level of inflation is essential for growth of the economy.
2) This is the reason why central banks and government take efforts to
contain inflation within a specified range and not make it zero
altogether.
3) In India also, inflation targeting framework intends to contain inflation at
around 4% with a band of -2%.
4) Inflation is a general rise in price over time.
"We are not responsible for this inflation," Jamshed Iqbal Cheema, a former advisor to
PM Khan on food security, told DW.
"Prices have increased in the global market, and this has had an impact on Pakistan as
well," he said, adding that the government has offered subsidies to mitigate the financial
hardship for citizens.

Most countries try to keep inflation somewhere around 2-3 percent per year. That is too low to cause
any problems for the businesses and households. At the same time, it is comfortably away from
negative inflation, i.e. from deflation. Of course, this target is often missed.

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