types of inflation and inflationary and deflationary gap

types of inflation and inflationary and deflationary gap

• 1.
  TOPIC INFLATION ANDITS TYPE PRESENTED TO SIR SADAM PRESENTED BY AYAZ MASHORI
• 2.
  Content  Inflation………………...  Deflation………………….. Disinflation……………….....  Types of inflation…………….  Causes of inflation …………..  Inflationary gap……………….  Deflationary gap………………..
• 3.
  Inflation  Inflation occurswhen the level of prices of goods increase people give more money but take less of the money  inflation is a sustained increase in the price level of goods and services in an economy over a period of time
• 4.
  Deflation  In economics,deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0%. Inflation reduces the value of currency over time, but deflation increases it. This allows one to buy more goods and services than before with the same amount of currency
• 5.
  Disinflation  Disinflation isa decrease in the rate of inflation – a slowdown in the rate of increase of the general price level of goods and services in a nation's gross domestic product over time. It is the opposite of reflation
• 6.
  Types of inflation Hyperinflation  Glopping inflation  Creeping inflation
• 7.
  Hyperinflation  it isinflation that is "out of control", a condition in which prices increase rapidly as a currency loses its value. Hyperinflation is over 100% per year. Prices as well as wages are extremely erratic. Money have no value and barter trade emerges (barter means the exchange of good for good). Example: Germany after I.WW, Hungary after II.WW
• 8.
  Glopping inflation  therate of inflation exceeds the rate of production growth, Galloping inflation is from 10% to 100%. Money loose purchase power, people hold as little money as possible.
• 9.
  Creeping inflation  therate of inflation doesn’t exceed the rate of production growth, Creeping inflation is < 10%
• 10.
  Causes of inflation Demand-pullinflation  Arises when aggregate demand in an economy outpaces aggregate supply  It involves inflation rising as real gross domestic product rises and unemployment falls. This is commonly described as "too much money chasing too few goods". Possible causes of demand-pull inflation:  Excessive investment expenditures  Excessive growth of consumption expenditures  Low-cost loans  Tax cutting  Augmentation of government expenditures
• 11.
  CAUSES OF INFLATION COST PUSH INFLATION  Cost-push inflation is a type of inflation caused by substantial increases in the cost of important goods or services where no suitable alternative is available. It stands in contrast to demand-pull inflation
• 12.
  EXAMPLE OF COSTPUSS INFLATION  For example, an increase in the price of oil increases the cost of production for almost all goods and services and results in immediate increase in inflation. Such an inflation is cost-push inflation. Similarly labor strikes, wars, floods, etc. reduce supply and increase prices
• 13.
  INFALTIONARY GAP  Aninflationary gap is a macroeconomics concept that describes the difference between the current level of real gross domestic product (GDP) and the anticipated GDP that would be experienced if an economy is at full employment, also referred to as the potential GDP. For the gap to be considered inflationary, the current real GDP must be the higher of the two metrics. ‘’REFFERENCE’’ https://www.investopedia.com/terms/i/inflationary_gap.asp #ixzz5WiDVGSoF
• 14.
  Graph
• 15.
  DEFLATIONARY GAP  Deflationarygap is the amount by which actual aggregate demand falls short of aggregate supply at level of full employment‘  It is a measure of amount of deficiency of aggregate demand.
• 16.
  GRAPH
• 17.
  THANKX FOR YOURATTENTION