Updated By: LatestGKGS Desk
What is Inflation, Causes?
Inflation rises every rupee
When there is a sustained increase in the general level of prices for goods and services.
An inflation rises every rupee you own buys a smaller percentage of good or service.
The value of rupee does not remain constant when there is Inflation.
where there is an increase in inflation, there is a decline in purchasing power of money.
There are major four inflation that is -
- Creeping inflation
- Trotting inflation
- Galloping Inflation
- Hyperinflation.
There are major causes of inflation:
When the consumers, businesses or the government demand for goods and services exceed the supply thus the cost of an item rises unless supply is perfectly elastic.
We do not live in a perfect market supply is somewhat inelastic and the supply of goods and services can only be increased if the factor of production increased.
Increase in demand increases In other areas such as the supply of money, an increase in wages which would then give rise in disposable income and once the customer has more this income he leads to more spending.
The excessive demand, the prices of final goods and services would be forced to increase and this increase gives rise in Inflation.
