Inflation: Huge and Unusual Inflation in the coming years.

Inflation: If you own 100 rupees(2020) now then it is equal to 1 rupee 20 paise in 1958. It means 100₹ note today has the same value as that of ₹1 in 1958. The value of the money changes as time passes.

What is inflation?

Inflation is the measure of goods and services of the average price. It is measured at a certain period. It is the rise of the Denver of the period. An increase in the price results in a decrease in the value of the money. Various types are used to measure this.

Cash, Currency, Financial, Investment
Cash

Understanding inflation:


Remember, the government is not responsible for inflation. There are many factors affecting it.
1. Economic boom:  It means that the economy should develop high. If it grows then people have money in their hands. And they will spend it on other goods and things. Likewise, more spending on power occurs and demand for the goods and services increases thereby. If the demand for specific things increases then it’s called demand-pull inflation.

Rupee, Indian, India, Money, Bank Note
Money

2. Increase in price of raw material: an increase in price for raw material because of an increase in manufacturing products. If the manufacturing cost increases then you get the profit definitely company will increase the rate of goods. Also, the primary concern is bringing in assessments on everything. So this is termed as cost-push inflation.
3. Salaries of employees: an increase in the salary of employees may also result. Low employment and increases in salary.
4. Currency: If the government is printing a lot of currency notes. So then the number of cash increments however esteem misfortunes.

Present inflation rate:

Now at present, the percentage is getting reduced and decrease. One of the main reasons to discuss is the COVID-19 situation. Many countries imposed lockdown. People neither went to shops nor to travel. Then the majority of the money got saved.

What if 0% inflation.

If there is 0% then definitely companies may not increase the salaries. So that the unemployment rate gradually increases. And if there is a decrease in this then the amount spent will be less. And which further implies losses in business.

The best level of inflation:

As we discussed above high inflation is also risky and also low also results in difficulty. Then what is the level? And for the developed nations the rate must be 2%. So this is chosen by the national bank and government. Coming to our country (India) it ought to be nearly around 4-5%. This is a stage where the prices of material and unemployment are balanced.

Controlling inflation.


To control inflation national central bank is responsible. Coming to India RBI controls It by increasing its interest. If the interests are higher then only a few companies reach and value the n market becomes less and resulting in this.

1. printing less number of notes.
2. Increasing the taxes.
3. Spending the money by the government.

Rupee, Indian, India, Money, Bank Note
notes

Types:

Demand-pull effect:

With more expansion in cash, flexibly diminishes the incentive for the Money. This is an expansion in the info creation measure. Which additionally incorporates the assembling of crude material items

Cost-push inflation:

With more expansion in cash, flexibly diminishes the incentive for the Money. This is an expansion in the info creation measure. Which additionally incorporates the assembling of crude material items

Built-in inflation:.

An increase in the wages and salaries of employees results in built-in inflation.

Formula.

The formula for measuring is:
Change in inflation = Final CPI value index / initial CPI value index.

Inflation vs recession

To discuss, economic growth and inflation are directly related. If the economy of a country is developed then It increases. But not always this situation occurs. Similarly, if development decrease then it may increase. And this is called stagflation. During 1870-1890 USA is under The great deflation period. In which deflation+economic growth went simultaneously.

Consequences:

Instead of keeping and storing money in box, people buy gold so that value of gold increase as time passes. Few people keep thatbmomey in real estate so that they may gain.

Board, Blackboard, Economy, Inflation
inflation

Conclusion:

Inflation shouldn’t be much higher and not much lower. But it should maintain some rate of percentage. It should not exceed the given limit or shouldn’t lag the specific limit. It depends on the way you spend money on a specific good.

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