THE TYPES OF INFLATION ИСАЕВА К. С. ИБМ 2 - 12
PROJECT PLAN : 1. Definition of inflation 2. Influence of inflation on business 3. Two general types of inflation • Demand-pull inflation • Cost-push inflation
DEFINITION OF INFLATION Inflation is generally defined as a persistent rise in the general price level with no corresponding rise in output, which leads to a corresponding fall in the purchasing power of money.
INFLUENCE OF INFLATION ON BUSINESS Mild inflation of a few per cent each year may pose few difficulties for business. However, hyperinflation, which entails enormously high rates of inflation, can create almost insurmountable problems for the government, business, consumers and workers.
TWO GENERAL TYPES OF INFLATION Demand-pull inflation An alternative way that we can look at this type of inflation is to say that it occurs when injections exceed withdrawals and the economy is already stretched (i. e. Little available labour or factory space) and there is little scope to increase further its level of activity.
COST-PUSH INFLATION Alternatively, inflation can be of the cost-push variety. Tills takes place when firms face increasing costs. This could be caused by an increase in wages owing to trade union militancy, the rising costs of imported raw materials and components or companies pushing up prices in order to improve their profit margins.
WORLD INFLATION RATE 2010
