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INFLATION

  A situation of rising prices of goods. The rate of inflation is defined as the rate of change of the price level. Inflation and other forms Deflation - Decrease in level of prices. Reflation - Moderate degree of controlled inflation Disinflation - decline in the rate of inflation Stagflation - Inflation Accompanied by stagnation on the development Causes of inflation A. Factors causing an increase in demand Increase in the money supply Increase in disposable income Increase in community aggregate spending on consumption Increase in exports Increase in salaries, wages Increase In population B. Factor causing a decrease in supply Deficiency of capital requirement Scarcity of other complementary factors of production Decrease in imports Hoarding by traders Natural Calamities Types of Inflation: 1. Suppressed Inflation: Deliberate policies are adopted to prevent price rise, but the impact of these policies is only temporary since prices rise as soon as these are relaxed. Here is a si...
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Money

Anything which is widely accepted in the discharge of obligations Development of Money Commodity Money- The earliest form of money consisted of goods like rice, wheat, cattle, etc Metallic Money- the metals such as gold, silver, bronze, etc were used to make coins. The government kept the right to issue coins and certify their quality and weights. Paper Money- It was introduced to supplement metallic money. When it was introduced it was backed up by the same amount of gold but now it only a proportion of that. Bank Money- Paper money has been supplemented or replaced by bank money. It leads to bank deposits, credit card, debit cards, etc Kinds of Money Standard money- For such type of money, intrinsic value (real value) is equal to face value( the value written on the coins). Token Money- Its face value is greater than its intrinsic value. A rupee is a standard unit of money in India, but its face value is greater than its real value Characteristics of Money Cognisability- The money...
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