Inflation

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INFLATION Inflation can be generalized as the sudden or consistent of an upward movement in the general price of commodity. While the price of goods increases, the value of money goes down significantly causing the inflation effect. Therefore, inflation demonstrate, a reduction in the purchasing power per unit of money. Inflation can be categorized into various categories according to the rate of price rise of goods. Mild or creeping inflation occurs when prices rise2% to 3% in a year. This type of inflation does not cause harm to the economy, it's actually outlay benefits to the economic growth of the state. With the mild effect the prices are expected to rise and a results of that, increase in demand of products, as…show more content…
* * Inflation helps a country economy to be able to adjust prices of commodity and of those relative commodities prices On the other side, inflation is harmful to economy, political and social growth of a state. Inflation leads to unfair distribution of wealth of a state where some people get richer while others poor creating a big gap in the social status of a state. High inflations such as galloping inflation leads to currency value depreciating leading to low economy growth rate and a turnover in the foreign investors. Inflation causes reduction in consumer saving power, which tends to affect the old people who live on savings. Inflation affects balance of payment of a country. It affects the development activities as people lose their confidence and encourage social evils. ANTI-INFLATION MEASURES These are measures instituted to curb inflation; * Monetary measures This is a policy that involves control of money demand, money supply and the availability of credit in the market. This monetary policies are applied by the Central bank of the states. * Fiscal measures The government of a state may induce measures to help minimize inflation. These measures may include changes in the tax levels, reduction in the public expenditure and control

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