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INFLATION

INFLATION:

The increase in the prices of commodities is called inflation.

In other words,

The upward price movement of goods and services from an economic year is called inflation.

An increase in the quantity of money and credit is called inflation.

CAUSES OF INFLATION:

There are many causes of inflation which are as under,

• The first cause of inflation is that when the government prints the excessive amount of money to deal with a financial crisis.
• The second cause of inflation is the international lending and national debts.
• The third cause of inflation is the rise in production cost which impact on the final goods of the company product price raising.
• The fourth cause of inflation is the income taxes and sales taxes.

TYPES OF INFLATION:

There are four main kinds of inflation which are as under,

• Demand pull inflation
• Cost push inflation
• Sectoral inflation
• Pricing power inflation

DEMAND PULL INFLATION:

It is also known as wage inflation. The demand pull inflation occurs when the demand for goods and services increases from the supply is called demand pull inflation.

This kind of situation occurs when the supply of the commodity is less and the prices of commodities become rise that situation is called demand pull inflation.

COST PUSH INFLATION:

Cost push inflation occurs when the cost of production rise and it leads to increase in the prices to finished goods and services.

PRICING POWER INFLATION:

Pricing Power inflation occurs when the industries or administrators decide to increase the prices of their commodities for increasing the profit margins is called pricing power inflation. It is also called the administrative price inflation.

SECTORAL INFLATION:

An increase in the prices of goods and services which produced by a certain industrial sector is called sectoral inflation.

OTHER INFLATION TYPES:

There are two other types of inflation which are as under,

• Hyperinflation
• Fiscal inflation

HYPER INFLATION:

This kind of inflation occurs during or after the war is called Hyper inflation.

FISCAL INFLATION:

This kind of inflation occurs through the government excessive money spending is called Fiscal inflation.

Tags: Causes of Inflation, Cost Push Inflation, Demand Pull Inflation, Excessive Money, Hyper Inflation, Pricing Power Inflation, Sectoral inflation, Types of Inflation