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Panigrahi
Deflation
Disinflation
denotes a decline in
the rate of inflation.
It
It
It
is a continuous process.
refers to a rise in prices in general.
involves a considerable increase in
prices.
It causes a decline in the purchasing
power of money.
1.
2.
P2
Aggregate Demand 2
P1
Aggregate Demand 1
Q1
Q2
Caused
Affected by:
I. Wages (increases in wages and salaries).
II.Increase in price of key imported inputs.
III.Exchange rate depreciation.
IV.Increase in profit margins.
V.Decrease in productivity for the same
remuneration.
VI.Natural disasters.
Aggregate Supply 1
P2
P1
Aggregate Demand
Q2
Q1
12
a)
b)
c)
d)
e)
f)
g)
h)
BENEFITS
DEBTORS
ENTREPRENEURS
INVESTORS
FARMERS
UPPER INCOME
GROUPS
LOSES
CREDITORS
FIXED INCOME
GROUPS
CONSUMERS
MIDDLE AND
LOWER INCOME
GROUPS
Causes
Fiscal Measures
Monetary Measures
General Measures
banks.
Decrease currency control.
Increase productivity.
Freeze prices and wages.
Implement a wage restraint policy.
Encourage personal savings.
Implement control measures for
consumer credit.
Import control: make competing
imported goods cheaper.
Introduce price indexation: linking all
prices to a particular index, e.g. CPI.
Inflation targeting.
Deflation