Inflation

Inflation

Inflation

The concept of inflation is the economic rate that leads to an increase in the general level of prices of services and goods. This leads to a decrease in the purchasing power of the currency. Inflation is defined as the continuous and general rise in prices. Other inflationary tariffs are the excessive increase in circulation and the decrease in purchasing power.

Types of inflation

Inflation is divided into a group of species, based on various economic criteria :

• The standard inflationary pressure, divides into two types :

1. Demand inflation is the increase in prices due to the high demand for supply, which leads to the inability of supply to face the rise in demand due to the full use of the productive elements or the lack of flexibility of the means used in supply to meet the surplus demand.
2. Cost inflation is the increase in the costs of production factors at a rate exceeding the rate of increase in production. This leads to a rise in the general price level. The most important factors are the labor costs, which increase their rates and increase the levels of realized benefits of production.

• Standard inflation exposure, divided into three types are :

1. Apparent inflation: is to take the government and monetary authorities a negative attitude towards this inflation; which leads to the spread of phenomena, and the accumulation and acceleration of public prices are rising at a higher rate of increase circulation of money to the quantities traded.
2. Stressed inflation: An economic situation in which prices are fixed, with inflation pressures; because of the freezing of public power prices; in the adoption of legislation or administrative decisions for this type of inflation.
3. Hidden inflation: the emergence of a significant increase in cash entry without a method of disbursement; because of the presence of intervention from the state, the various procedures become without the exchange of increasing incomes, which leads to the survival of inflation is hidden can not be seen.

• The standard of belonging factors leading to inflation, divided into two types :

1. Local inflation: inflation is the result of domestic factors in the country, and external factors have no significant impact in the occurrence.
2. Imported inflation: is the increase in domestic price levels; due to the impact of a range of external factors clearly.

• Standard intensity of inflation, divided into two types :

1. Hyperinflation: The emergence of successive high price rises. They produce large and harmful effects, which are difficult to limit or manage, or lead to, the loss of money for their purchasing power and value. This causes individuals to get rid of their money.
2. Inflation is the average price increase that is less than hyperinflation, with the role of money as a financial intermediary, but not completely lost confidence; government authority can rebalance its own functions.

Characteristics of inflation

Inflation as one of the most important economic phenomena is characterized by a number of characteristics, including :

• Inflation is the result of many economic factors that may conflict together; inflation is therefore a complex, complex and multidimensional phenomenon.
• Inflation results from imbalances in the relations between prices of services and goods, and the prices of productive elements such as product costs, wages, and profit levels.
• Inflation leads to devaluation in relation to prices of services and products, which is expressed in the form of purchasing power parity.

Causes of inflation

The emergence of the phenomenon of inflation depends on many reasons, the most important of which are :

• The increase in investment and consumption expenditure is the increase in total expenditures from the full level of employment, reflecting the increase in aggregate demand for aggregate supply at the operational level, resulting in inflation from that increase; due to the increase in total expenditures with no increase in the supply of goods; Offset by a constant supply of products and services.
• Budget deficit: The increase in public expenditure compared to public revenues, and is one of the methods on which governments depend on financing productive projects in progress, and affects the fiscal deficit in general in the economic conditions of States.
• Lack of productive elements: a decline in the number of workers or raw materials, and other factors of production that affect the overall production process, and lead to the emergence of inflation; due to low supply and high prices.
• The decline in capital in kind is the emergence of a shortage in the capital used in the level of operation, leading to the inflexibility of production, resulting in a widening gap between the money offered and traded products and services, leading to higher prices and the emergence of inflation.

Inflation rate :

Inflation is a measure used to measure the extent to which currencies lose their monetary value; that is, the inflation rate is used to measure the rise in the prices of services and products over time. Inflation may increase as a result of the enormous printing of money, leading to increased economic supply and reduced demand, Some of the important products result in their high cost.

See also

• Loans