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Inflation
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Inflation
<<Previous Next>> -Rajmeet Ghai In simple terms inflation is the rise in price of commodities and low purchases. Causes and effects Inflation is caused when there is too much demand is more for goods or too much money in circulation. Inflation affects the entire economy of the nation. A drop in exchange rate, increase in tax or wages can lead to inflation. An increase in the quantity of money supply can cause inflation. Controlling inflation Depending on what caused inflation, policies should be implemented. For instance if the cause was excessive demand for commodities, it should be reduced. Production costs can be reduced. Banks can increase interest rates to avoid circulation of money in excess. Trying to maintain a stable and fixed currency rate. The supply of gold to the amount sold or output should be stable. The percentage of inflation can be measured using the consumer price index. It is a measure for price change based on production of goods. <<Previous Next>>
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Inflation is the rise in prices of goods and services. There can be many effects of inflation from decrement of the real value of money to the increasing demand of goods. Inflation can be controlled by increasing the interest rates in banks, increasing the taxes and reducing the expenditure of government. Government should bring out a planned policy to reduce the effect of inflation in the country. Government can also restrict the increase in incomes and prices. Inflation has to be controlled and government has to take assertive measures to control it. Hemant Sharma 01-8-2012 01:57 PM inflation inflation can be controlled by proper regulations of rbi
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