a reduction in the purchasing power per unit of money a loss of real value in the medium paying college athletes inquiry essay of exchange and unit of account within the economy. The GDP deflator is another very important measure of inflation as it measures the price changes in goods that are produced domestically. Inflation is defined as a sustained increase in the general level of prices which results in a decline in the purchasing power of money. This has created a class of people who are becoming richer day by day and the other class is becoming poorer. Inflation alters the distribution of income. Effects and measurement of inflation: * The most immediate effects of inflation are the decreased purchasing power of the rupee and its depreciation. Inflation at very fast rate is Hyper-Inflation, medium is Strato-Inflation and low lever is Creeping inflation. Is the unexpected and untended change, in the level of price. Pakistans government has been making a great effort to check this inflation.
Inflation is the rise in the prices of goods and services in an economy over a period of time. By using the CPI, the inflation rate can be calculated. The CPI measures inflation as experienced by consumers in their day-to-day living expenses; it is the ratio of the value of a basket of goods in the current year to the value of that same basket of goods in an earlier year. Lenders are generally hurt more than borrowers during long inflationary periods, which mean that loans made earlier are repaid later in inflated rupees. Illusions of making profits (companies will think they were making profits while in reality theyre losing money if they dont take into consideration the inflation rate when calculating profits). Hoarding, dishonest attitude OF traders, steps TO check inflation, conclusion. When the general price level rises, each unit of the functional currency buys fewer goods and services; inflation is a decline in the real value of money and the loss of purchasing power of people. High inflation distorts economic decision making as producers and consumers change their spending and saving patterns to minimise the potential impact of inflation upon themselves. To measure the price level, economists select a variety of goods and construct a price index such as the consumer price index (CPI). This is one measure of inflation. The second cause is cost-push.