WHAT IS INFLATION??

Inflation is a persistent increase in the general price level of goods and services in an economy over a period of time In India. decrease in the purchasing power of a currency in known as inflation.

         TYPES OF INFLATION

1. Demand pulls inflation
2. Costs push Inflation
3. Wage’s Inflation
4. Imported Inflation

        1. Demand Pull Inflation- occurs demand for goods and services exceed the supply.

        2. Cost Push Inflation- Price increases due to increase in price of other products.

        3. Wages Inflation- It occur due to increase in wages as a result purchasing power of people increase.

        4. Imported Inflation- The general price level rises in a country because of the rise in prices of imported commodities.

       CATEGORIES OF INFLATION

1. Creeping Inflation- When there is a general rise in prices at very low rates, which is usually between 2-4 percent annually.

2. Walking Inflation - This type of strong, or pernicious, inflation is between 3-10% a year. It is harmful to the economy because it heats up economic growth too fast.

3. Galloping Inflation- When inflation rises to ten percent or greater, it wreaks absolute havoc on the economy. Money loses value so fast that business and employee income can't keep up with costs and prices.

        4. Hyper Inflation- Hyperinflation is when the prices skyrocket more than 50% -- a month. It is fortunately very rare.

        INFLATION RELATED TERMS --

1. Deflation- Deflation is the opposite of inflation -- it's when prices fall. It is caused by a reduction in the supply of money or credit.

2. Hyperinflation- Extremely rapid or out of control inflation. Hyperinflation is a situation where the price increases are so out of control that the concept of inflation is meaningless.

        3. Stagflation- A condition of slow economic growth and relatively high unemployment-

4. Disinflation- A slowing in the rate of price inflation. Disinflation is used to describe instances when the inflation rate has reduced marginally over the short term. It is used to describe periods of slow inflation.

5. Reflation- Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes. It is opposite of disinflation.

Explanation

maan le miene tereko 10,000 rupee diye..tune khus hoke mobile khareed liya...miene 10 aur logoin ko 10000 rupee diye sabne jaake mobile khareed liya....logoin ki DEMAND bad gayi kyuki logoin ke paas MONEY aa gaya....ab jab logoin ke paas paisa aa jayega to company ke paas product ke supply kam padne lagegi aur usko demand ko poora karne ke liye apni production badaani padegi...production badaane ke liye usko manufacturing units badaani padegi..pehle jis ek machine se 2 phone nikal rahe
they ab 4 machine se 10 phone nikleinge...to machine company ne khareede jyada to handlers bhi hue jyada ...obiviously eng rakhna padega labour jyada rakhni padegi to EMPLOYEMENT bad jayegi...ab since company ki production cost badegi to usko paisa customer se wassolna padega...to 10000 ka mobile 15000 ka ho jayega...this is INFLATION.

#thnx ABHI