m
  

 

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 1

V ` nflation is nothing more than a sharp
upward rise in price level.µ
V Too much money chasing, too few
goods.µ
V nflation is a state in which the value of
money is falling i.e. price are rising.µ

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 2

V ën the basis of rate of inflation
V ën the basis of degree of control
V ën the basis of causes
V ëthers

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 3

V emand pull inflation
V Cost push inflation

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 4




° 1

1
° °

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 5

 1




° 1 °1

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 6

V Monetary Measures
V Fiscal Measures
V ëther Measures

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 7

V Credit Control
V emonetization of Currency
V ssue of New Currency

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 8

V Keduction in Unnecessary Expenditure
V ncrease in Taxes
V ncrease in Savings
V Surplus Budgets
V Public ebt

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 9

V To ncrease Production
V Kational Wage Policy
V Price Control

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 10

V Consumer Price ndex
V Wholesale Price ndex

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 11

V CP is a measure estimating the average price
of consumer goods and services purchased by
households.
V CP measures a price change for a constant
market basket of goods and services from one
period to the next within the same area (city,
region, or nation).
V t is a price index determined by measuring the
price of a standard group of goods meant to
represent the typical market basket of a typical
urban consumer. The percent change in the CP
is a measure estimating inflation.

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 12

V WP was published in 1902,and was one of the
economic indicators available to policy makers
until it was replaced by most developed countries
by the CP market. index in the 1970.
V WP is the index that is used to measure the
change in the average price level of goods
traded in wholesale market.
V Some countries (like ndia and The Philippines) use
WP changes as a central measure of inflation.
However, ndia and the United States now report
a producer price index instead.

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 13

V n present day service sector plays a key role in
ndian economy. Consumers are spending loads of
money on services like education and health. And
these services are not incorpated in calculation of
WP .
V WP measures general level of price changes either
at level of wholesaler or at the producer and does
not take into account the retail margins. Therefore
we see here that WP does give the true picture of
inflation.

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 14

V WP is supposed to measure impact of prices on
business. `But we use it to measure the impact on
consumers. Many commodities not consumed by
consumers get calculated in the index.

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 15

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 16
(





 (



  




(


  


Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 17

 m
m 
p
p p p 


  p

 
   

  
 
p


Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 18

V They add inefficiencies in the market,
and make it difficult for companies to
budget or plan long-term.
V Uncertainty about the future purchasing
power of money discourages investment
and saving.

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 19

V There can also be negative impacts to
trade from an increased instability in
currency exchange prices caused by
unpredictable inflation.
V Higher income tax rates.
V nflation rate in the economy is higher
than rates in other countries; this will
increase imports and reduce exports,
leading to a deficit in the balance of
trade.
Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 20
V ncrease in the price of wheat
V ncrease in the price of world oil
V ncrease in the price of rice
V ncrease in the price of CNG

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 21

Ghanshyam iilm gurgaon 11/19/2010 6:46 AM 22