Causes and effects

• Inflation is caused when there is too much demand is more for goods or too much money in circulation.

• Inflation affects the entire economy of the nation.

• A drop in exchange rate, increase in tax or wages can lead to inflation.

• An increase in the quantity of money supply can cause inflation.

Controlling inflation

• Depending on what caused inflation, policies should be implemented. For instance if the cause was excessive demand for commodities, it should be reduced.

• Production costs can be reduced.

• Banks can increase interest rates to avoid circulation of money in excess.

• Trying to maintain a stable and fixed currency rate.

• The supply of gold to the amount sold or output should be stable.

• The percentage of inflation can be measured using the consumer price index. It is a measure for price change based on production of goods

Source: Contents are provided by Technicalsymposium Google Group Members. Disclaimer: All the above contents are provided by technicalsymposium.com Google Group members. Further, this content is not intended to be used for commercial purpose. Technicalsymposium.com is not liable/responsible for any copyright issues.