ProfSKJain MNIT Nov24 Macroecon.
ProfSKJain MNIT Nov24 Macroecon.
ProfSKJain MNIT Nov24 Macroecon.
23-11-2024 14
Inflation
Inflation: Continuous rise in prises
Types of Inflation
❑ Creeping Inflation:
• Moderate, Predictable & Manageable
• Single digit (< 10%)
❑ Walking Inflation:
• High 20% to 50% & difficult to manage
❑ Galloping Inflation:
• Exceptionally high inflation rate
• Double or Triple digit: 50% to 999%
❑ Hyper Inflation:
• Prices rise very fast: > 1000% (during post-war period)
• Paper currency tends to become worthless
11/23/2024 Prof. Sudhir K. Jain 15
Causes of Inflation
• Demand-pull: Tax cutting → Demand exceeds Supply
• Cost-push: Cost of fuel, energy, …
• Monetary policy: Increase in money supply.
• Devaluation due to BoP problem
• Rising wages
• Fiscal policy: High public expenditure → Deficit
financing; High subsidies
• Dual economy
India 35.7
World 38
→ Population Explosion