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GROUP 2: MLS 2F
BULACLAC, MC Chelsea
LASERNA, Cita Mae
MONSALE, Antoinette Marie
TANTENGCO, Precious
Inflation
Definition
Types of Inflation
Creeping Inflation
Walking Inflation
Galloping Inflation
Hyperinflation
Demand Pull Inflation
Cost Push Inflation
Causes of Inflation
Rising Wages
Import prices
Raw Material Prices
Profit Push Inflation
Declining productivity
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Higher taxes
Rising house prices
Printing more money
Effects of Inflation
Positive Effects
Negative Effects
Statistics
Inflation Rate of the World
Inflation Rate in Asia
Inflation Rate in the Philippines
Solutions to Inflation
Monetary policy
Higher interest rates and slowing
money supply
Fiscal policy
Fixation of exchange rates
WHAT IS INFLATION?
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INFLATION
is a sustained increase
in the cost of living or
the average / general
price level leading to a
fall in the purchasing
power of money
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Types of Inflation
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Creeping Inflation
Creeping or mild inflation is when prices rise 3% a
year or less
According to the U.S. Federal Reserve, when prices
rise 2% or less, it's actually beneficial to economic
growth.
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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
People start to buy more than they need, just to avoid
tomorrow's much higher prices
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Galloping Inflation
When inflation rises
to 10% or greater
Money loses value so
fast that business and
employee income
can't keep up with
costs and prices
Foreign
investors avoid the
country, depriving it of
needed capital.
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Hyperinflation
It is when the prices skyrocket more than 50% -- a
month
Very rare
Usually due to unrestrained printing of fiat currency
Most examples of hyperinflation have occurred when
the government printed money recklessly to pay for
war.
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it outstrips supply
A growing economy can create some inflation as
people feel confident about the future and spend
more
Discretionary fiscal policy
Marketing and new technology
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DEMAND-PULL INFLATION
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COST-PUSH INFLATION
This isn't as common
as demand-pull inflation,
because it only occurs
when there is a shortage
of supply combined with
enough demand to allow
the producer to raise
prices
higher costs at
companies leads to higher
selling prices in order to
maintain margins, resulting
in rising inflation.
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Cost push
inflation can
be caused by
many factors
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1. Rising
Wages
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2. Import
prices
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3. Raw
Material Prices
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4. Profit
Push
Inflation
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5. Declining
productivity
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6. Higher
taxes
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MONETARY EXPANSION
Over-expansion of the money supply
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Rising house
prices
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Printing more
money
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POSITIVE
EFFECTS
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NEGATIVE
EFFECT
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STATISTICAL UPDATE
Inflation Rate of the World
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Top 20
Countries
with the
highest
inflation
rate in 2014
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STATISTICAL UPDATE
Inflation Rate of Asia
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STATISTICAL UPDATE
Inflation Rate of the Philippines
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policy
Setting higher interest rates and slowing money supply
by the central banks can control inflation
Reducing demand, by taxation through fiscal policy
Fixation of exchange rates
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Monetary Policy
Changing the rate of growth of demand for money
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Sharing of wealth
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End!
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