increasing reliability on the use of technology to estimate future plans, widespread awareness of the economic decision making processes, readily available literature on risk management in business and much advanced, organized and computerized methodologies to ensure solid business-monitoring, projects today are incurring heavy financial losses. And the situation is same throughout the world. If we draw an analysis of the trends of the past and present, it would apparently seem that the modern-world businessmen are far immature and less educated in business as compared to so called “experts” of the past. It appears that development in the science and technology has generated an awareness that has adversely affected the practical world. Things are happening in an unexpected way. This proves that something bigger, not much considered / studied, is controlling business in the international scenario, and that is “inflation”. Inflation is majorly responsible for the jammed projects, lessened GDPs, suppressed business, increased loans and this has resulted in aggravating poverty, famine and various other evils in the educationally rich and knowledgeable societies of the modern world. It is the byproduct of inflation that we see people possessing bigger sums than what their forefathers had possessed in their times, still modern-age people are poorer than their forefathers.
Inflation as the name suggests, means to expand in volume and decrease in density / value, just like a balloon would expand when air is pumped in it. Apparently it seems bigger when inflated than the size it had been originally, but it becomes light enough to float in the air as compared to the uninflated balloon-material. Likewise, money has increased in amount manifolds, yet it has lost its worth. In other words, the “purchasing power” of money is lost. According to Park (2007), p-544, inflation means a rise in the price of an object with the passage of time or in other words the amount ...
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In the same way, it will provide an analysis into some of the effects of inflation while focusing on the different types of inflation arising from different economic situations. Introduction Inflation is described to be a rate in which the overall price of goods and services is increasing while the purchasing power decreases in an economy (Nicholson 57).
In effect, inflation is the loss or the diminishing of value of money in a given economy (Blanchard 45). In plain language, inflation is the instance where goods and services get expensive or the phenomena where people complain that the price of commodities is rising.
In common usage inflation refers to the state of the economy when the money supply is much higher than the physical quantity of goods available in the economy. According to Keynes, inflation refers to that phase of rise in the general price level after the output in the economy grows beyond the full employment level of output (Frisch, 1983).
The effects of inflation can affect an economy in positive and negative ways or both positively and negatively simultaneously because it affects the differently. In many circumstances, there are different explanations that could be given to the rise of inflation in an economy and which could explain the reasons why a currency can lose its purchasing power as compared to different circumstance in market.
Businesses are reluctant to make investments during periods of volatile inflation. Countries suffer from a tax rate that is based on pre-inflationary periods that are less than the current value. It also causes exports to go down as prices go up resulting in a trading deficit.
In cases where demand increased tremendously and threatened to augment inflation rates and cause large balance of payments deficits-income, instead of monetary policy, was used as the instrument to keep
effect that it will now require more units of money for the same goods and services purchased or the number of goods and services purchased with the same amount of money is reduced. In effect, inflation is the loss or the diminishing of value of money in a given economy
This discussion concludes by outlining control measures necessary to manage inflation and the alternatives polices that can be taken by the government to manage inflation.
Inflation refers to increment of price levels in
Inflation refers to increment of price levels in general that is the rise in prices in not on individual commodities but in all areas over a period of time. It’s a change expressed in percentage and compared over
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