Inflation and inflation types, economics, Microeconomics

Assignment Help:

Inflation Types

Inflation is generally classified on the basis of its rate and causes, while rate-based classification of inflation refers to the severity of inflation or how high or low is the rate of inflation, cause-based classification of inflation refers to the factors that cause inflation. In this section, we discuss the types of inflation classified on the basis of its rate. On rate basis inflation is classified as:

(i) Moderate inflation: - when the general level of price rises at a moderate rate over a long period of time, it is called moderate inflation or creeping inflation.

(ii) Galloping inflation: - the economists have different views on galloping inflation. For example, according to baumol and blinder, galloping inflation refers to an inflation that proceeds at an exceptionally high rate. They do not specify what rate of inflation is exceptionally high Samuelsson and nordhaus define galloping inflation more precisely. According to them inflation in the double-or triple-digit range of 20,100 or 200 percent a year is labeled galloping inflation. 

(iii) Hyper inflation:- in general, a price rise at more than three-digit rate per annum is called hyper inflation, according to some economists, however, hyperinflation is often defined as inflation that exceeds 50 percent per month…..an inflation rate of 50 percent per month implies a more than 100-fold increase in the price level over a year. The following anecdotes about German hyper inflation would reveal what happens during the period of hyper inflation. 

It was cheaper to burn currency notes to make tea rather than buying it in the tea-shop.

Price fo a house in pre-inflation period was just sufficient to pay a day’s rent in post-inflation period.

At the time of entering the café, the price of a cup of coffee was 4,000 makes, which rose to 8000 marks before one could finish his coffee. 

(iv) Open an suppressed inflation: - in the contemporary writings on the subject, one often comes across the terms open inflation and suppressed inflation. When there is no control on the rising prices and prices are free to fang their own level, the inflation under his condition is called open inflation. 

In spite of these control measures, prices do rise and inflation does take place but at a rate lower than the potential rate in the open system. This kind of inflation is called suppressed inflation. 


Related Discussions:- Inflation and inflation types, economics

Physical capital, Physical Capital: A tangible tool, machine, building or o...

Physical Capital: A tangible tool, machine, building or other productive asset that is used to produce other goods or services. Pollution: Many economic activities involve disch

Explain and illustrate the concept of opportunity cost, Question 1: (a)...

Question 1: (a) Discuss the adjustment to an increase in demand for a perfectly competitive market in the: (i) Short run (ii) Long run (b) How would the same industry

Computers , During the 1990s, technological advance reduced the cost of com...

During the 1990s, technological advance reduced the cost of computer chips. Explain, with the use of supply and demand diagrams, how the following markets are affected in terms of

Arc elasticity of demand, Arc Elasticity of Demand - Arc elasticity cal...

Arc Elasticity of Demand - Arc elasticity calculates elasticity over the range of prices  - The formula of it is: *  Arc Elasticity of Demand: An Example

Rent, what do you meant by rent?

what do you meant by rent?

Assignment, Individual Assignment ECO101 - PRINCIPLES OF ECONOMICS elect...

Individual Assignment ECO101 - PRINCIPLES OF ECONOMICS electronic submission via Moodle 6 Questions 100 marks (15% of total course) All questions should be attempted. 30-50 w

Tropospheric pollution or Air pollution, Air is one of the important consti...

Air is one of the important constituent in the environment that is prone to pollution. Pollution of air refers to that part of atmosphere which is very nearest to the earth’s surf

Learning curve in practice, Learning Curve in Practice * Scenario - ...

Learning Curve in Practice * Scenario - A new firm enters chemical processing industry. * Do they: 1) Produce a low level output and sell at high price? 2) Produce

Determine the amount of composite commodities, a)  Joan's utility function ...

a)  Joan's utility function can roughly be estimated as : U = 60Q 1 3/4 Q 2 2/3 She chooses from two composite commodities Q 1 and Q 2 whose prices per unit are kshs 20

Price mechanism, discuss how the price mechanism allocate resources in a fr...

discuss how the price mechanism allocate resources in a free market system

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd