An Effect On Economic Activities Economics Essay

As a increase in general price level and therefore a fall in the value of money inflation is a normal level of prices of goods and services lack of time. inflation is use to to refer to a raise in the price of normal level as a goods and services,it affects some specific goods and services as in commodities inflation its increase journal level of time. the major type of inflation is inflation affecting a common man, because of this create a problem due to inflation. when the supply supply and demand goes out of control ,consumer should change their buying habits for manufacture to short production in 2007 in USA could best illustrate the effects of inflation housing prices demand is increase continuously from 2002 onword,it comes result in a dramatic decrease in demand.

Inflation will be clear a major problem in economy if the demand is increases bt supply of goods is constant, because if there is a lot of customer but very few suppliers then supplier can’t do anything, because the income is increase but deliver of the goods is constant, in market place the producer would not be able to control the cost of raw material and labor also. if this is happen it result comes with less profit or in some extreme case no profit ,it should come to out of business, the manufacture would not have an incentive to invest in new equipment and lack of technology. Uncertainty force people to withdraw money from the bank and change it into product with bigger lasting value like gold.the inflation causes lead the country lower economic growth, from the year 1950-1960 the average was at 2.00% inflation, between 1960-1970 the average was 7.2%,in 1970-1980 the average was 8.5%.there are lots of monetary measures like credit control, demonetization of currency, issue of new currency, reduction in unnecessary expenditure,increae in taxes, increase in savings ,surplus budgets, public debt. these are the monetary measures. There ae some fiscal measures like,to increase production,rational wage policy,prie control,rationing.there are so many tyes of economic crises ,in economy there is a inflation affected to Indian economy so when the global food trade systems stop delivering and the meager pay the price,for several years the global trade in tack foods has been heading towards a catastroph

CAUSES:-

In Indian economy the inflation have been bombarded comment, the causes of inflation is demand for goods, the economy us can make the largest contribution to prosperity and political stability by restoring the helth of the us t,in inflation income is increase bt no supply is increase because of lack of transperncy in inflation.so supplier cant give the satisfaction of goods,so mainly this is called inflation. There are so many factor influencing the inflation,the inflation import raises ,in the inflation rise in the labour cost ,it also effect indiscriminate lending by fund flush banks ,there are co-relation between inflation and gold price,people like marc Faber are habitually on air and cyber waves ,tout the idea that since central banks are inflating money supply. to investment in gold to defend yourself against inflation. we are already known that everybody is thinking the similar things and performing, in the same behavior, rationalizations are but excuse for all types of insanity but even so how strong is the affiliation between gold and inflation anyway hedge against inflation. one can make a commonsense case level that gold is a play against inflation due to partial supply, that is indeed the main basis of the squabble of many people in the financial. but we at fore trader decide to do away with groundless assumption for moment. By collecting the data cross-correlation between oil,gold,and inflation over a 30 years time, starting in 1980,and triumph to our day,the some of people surprising conclusion.

India is the one of the 7th largest country with land mass of 3.29 million sq k.m and largest in population of over a billion. this is knowing of 16 percent of the world population, the Indian country one of the produce about the worth gdp to fulfill the needs 2.5 million of oil per day which is 6.5 percent the total demand for oil.mow a days a oil must be used in so many different kinds of industry so that’s why there is a lack of shirtless ,so must known as a good decision for a good industrial company oli price is certainly as external factor how it affects in the Indian economy ,this research is made in underwork.in the international price affects whole the sale price in india exchange rage or rupee to dollar the Indian growth of rate,forex reserves of india,oil,and non-oil the trade balance. the analyze of the oil price and gold of inflation to offer policy suggestion.

Crude oil rates (2010-2011)

2011

January

$84.47

July

$88.82

February

$81.32

August

$77.72

March

$94.72

September

$77.31

April

$102.15

October

May

$92.92

November

June

$87.92

December

2011 Average

$87.48

 2010

January

$69.85

July

$67.91

February

$68.04

August

$68.34

March

$72.90

September

$67.18

April

$76.31

October

$73.63

May

$66.25

November

$76.00

June

$67.12

December

$81.01

2010 Average

$71.21

From 1991 to 2012 there crises of inflation givin above so these are the describe above. In 2007 ther is crises in us. in this the price is increasing bt the money of value is decreasing so thts why inflation in us gone through . in india so many people is working as a labour .these chart indicating the inflation of before 20 years study .and right now wt happen in Indian market this chart indicate this.

Types of inflation:

Inflation is generally means rise in prices, in inflation the price of a tub of goods and services that is envoy of the economy as a whole. it is a persistence and substantial rise in general level of prices after full employment level of output.

Demand-pull inflation :

The demand pull inflation is also called wage inflation or excess demand inflation when the total demand for goods and services in economy supply the same. when the supply is not much of as prices of the goods and services should raise leading to a condition called as demand -pull inflation. Inflation intriguing place due to demand pressure is known as demand pull inflation,demand pull inflation is increasing in quantity of money,it increase in business outlays or government expenditure,demand pull inflation foreign expenditure n goods and service

Cost-push inflation:

In the cost push inflation if the incresse in the cost of production of goods and services is causes to be a forceful increase in the prices of finished goods and services.this type of inflation should or should not be transpire in conjunction with demand pull inflation.the cost pull inflation increase in the on the whole price level due to cost-pressures is known as cost-push or supply side inflation.in cost pull inflation is going higher wage rates,higher profit margins,higher taxes and higher prices of input.the inflation is more often called administered price .

Other type of inflation:

1.fiscal inflation: this inflation occurs when there is overload government spend where there is scarcity budget.

2.hyperinflation:this is also known as escapee inflation or galloping inflation ,this type of inflation should be dispatch or soon after war.this should usually lead to the complete collapse of a monetary system. this type of inflation is ephemeral .

EFFECTS OF INFLATION:

Effect of inflation is described as enemy number one,so a high rate of inflation makes he life of poor miserable, the inflation mainly affect on economic growth due to a number of factor,distortion of comparative prices. rearrangement f welth between debtors and creditors ,aversion to long-term contact and excessive use of resources for bearing inflation hazar.this is effort to higher prices of input.

EFFECT ON ECONOMIC ACTIVITIES:

The effect on production is adverse effect on the profitability of business organization.

The firms find it gainful to hold rather than make to earn profits in the future.

In India the lack of uncertainty in the economic activities,so because of this decrease in saving.

There is another inflation is in the corresponding period of the previous year, the inflation rate was too low in the consequent year even a smaller raise in th price index will logically give rate of inflation .a similar absolute increase in the price index now will shoe a lower inflation rate at this condition.

The most instantaneous effects of inflation are the decreased purchasing power of the doller and its decrease. Decrease is specialy hard on retreat people with permanent income.

The people who are not fixed income are more able to handle because they can simply increase.

The third part of destabilizing effect on inflation id that some people choose to conjecture heavily in an attements, spending is converted from the normal guide and some structural redundancy.

The 4% inflation rates means that the price level for that given year has raisen 4% from a certain measuring year (currently 1982 is used).

To measure the price level for that for the current year .

INTEREST RATES AND INFLATION

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Inflation is the heave over time in the prices of good and services.the inflation usually considered as n annual percentage, presently like interest rates so many people directly think of inflation as a bad thing, but this is not essentially the case.Inflation is a natural by product of a vigorous,growing economy .there is a no inflation or deflation the lowering price actually a very too worse economic,wages raise at the similar rate as prices.

CONCLUSION

From the above facts and anaylisis over them we come out to many a conclusions in the way of positive approach and moreover this that gold, crude oil and also dollars are basically inter related to each other and also that they play a very important role over the economy of a country like India. We have also find out to be that gold as india being the largest under the consumption of all over the world has a great impact on the thinking of the citizens as a whole. Talking about the inflation part which took place in the year 1991 and it anaylisis till now we have come to many a conclusion over it that inflation rate in a country like india does affect to the country as whole but the fact that india did survive in such conditions earlier also and would pick a tick to survive in the future span as well.