Beruflich Dokumente
Kultur Dokumente
DESIRED LEARNING
OBJECTIVES
WHAT IS INFLATION?
Inflation occurs in an economy, when the
general level of prices is rising.
Rate of inflation in year t = 100 x (Pt Pt-1)/Pt-1
The Consumer Price Index (CPI) measures the
cost of a market basket of consumer goods
and services relative to the cost of that bundle
during a particular base year.
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Levels OF INFLATION
Low Inflation: It is characterised by prices that
rise slowly and predictably.
Galloping Inflation: It is the double-digit or
triple-digit rise in prices, 20, 100, 200%
Ex: Argentina, Chile and Brazil had suffered 50700% inflation in 70s and 80s.
Hyperinflation: It refers to a state when prices
are rising a million, even a trillion percent per
year.
Ex: Germany in 1920s CPI from 1
10,000,000,000. If a person had 300 mill marks
worth of assets in 1922, two years later, they
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would hardly worth a piece of candy.