Inflation

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Submitted By Nimo1
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INFLATION

Inflation can be generalized as the sudden or consistent of an upward movement in the general price of commodity. While the price of goods increases, the value of money goes down significantly causing the inflation effect. Therefore, inflation demonstrate, a reduction in the purchasing power per unit of money.
Inflation can be categorized into various categories according to the rate of price rise of goods.
Mild or creeping inflation occurs when prices rise2% to 3% in a year. This type of inflation does not cause harm to the economy, it's actually outlay benefits to the economic growth of the state. With the mild effect the prices are expected to rise and a results of that, increase in demand of products, as the consumer may prefer to buy the goods now to prevent future rise of prices. drives economic expansion.
Random or walking Inflation
This is a strong inflation that rises at a rate between 3-10% per annum. It causes harm to the economy and it should be controlled.it causes consumer to purchase more than they need to avoid future price increase. Hyper, runaway or Galloping Inflation occurs when inflation rises to a rate of more than 10% or greater, it completely undermine the economy stability of a country. Currency loses value so fast that business and employee income can't keep up with costs and prices also foreign investors tend to avoid investing in such a country leading to economic instability.
Inflation can be caused two main causes; demand pull inflation; this occurs when there is a big demand of goods compared to the available goods. This will lead to increase in price levels of the commodities thus leading to inflation.
Cost push inflation
It involves a situation where the cost of production leads to increase in price of commodities. This may be brought up by increase in money wage rates or even high taxes imposed…...

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