Inflation-(Part I)

By
Dhyani Mehta

Meaning of Inflation
Inflation is too much money
chasing too few goods.

Inflation is continuous rise in

general price level.

Full Inflation and Partial

Inflation
Full Inflation and Semi or Partial
Inflation.
Relation between Employment and
Price rise.
Inflation exist when there is no fullemployment and Proper money
supply.

Characteristic of Inflation
Inflation is all about Expansion of
money and credit. Root cause of
inflation is the expansion of total
money supply.
Inflation is always associated with
rise in prices which consistent and
persistent.
Inflation is always cumulative in the
sense that the rise in the price level
is mild in the first level and than it

Characteristic of Inflation
Excess of demand compared to
supply.
Demand pull and cost push Inflation.

Causes of Inflation
Upward shift in Demand:
Increase in Money supply
Expansion of paper money
Increase in velocity
Expansion of bank credit

Increase in disposable of people due to

decrease in taxation or reduction in
savings.
Rapid increase in population

Causes of Inflation
Downward shift in supply:
Shortage of factor supply
Increased exports
Diminishing returns or Increased cost
Hording of goods by producer

Thank You