1273550,Harpreet Kaur Mavi,F-1,Q-29-IS INFLATION ALWAYS HARMFUL?

                                                  INTRODUCTION

In economics, inflation is a persistent increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money; it is a loss of real value, as a single dollar is able to purchase fewer goods than it previously could.

Types of Inflation

The reasons for inflation depend on supply and demand. Depending on the type of inflation, changes in either supply or demand can create an increase in the price level of goods and services. In Keynesian economics, there are three types of inflation.

Demand-Pull Inflation

Demand-pull inflation is inflation that occurs when total demand for goods and services exceeds the economy's capacity to produce those goods. Put another way, there is "too much money chasing too few goods." Typically, demand-pull inflation occurs when unemployment is low or falling. The increases in employment raise aggregate demand, which leads to increased hiring to expand the level of production. Eventually, production cannot keep pace with aggregate demand because of capacity constraints, so prices rise .

Cost-Push Inflation

Cost-push inflation occurs when there is an increase in the costs of production. Unlike demand-pull inflation, cost-push inflation is not "too much money chasing too few goods," but rather, a decrease in the supply of goods, which raises prices.

DISCUSSION

In my opinion inflation can be harmful at the same time it can not be.So we can see inflation from both the contexts in the favour of inflation and against the inflation.

INFLATION IS HARMFUL

- Inflation is a measure of economy whether shrinking or growing but mostly inflation results in shrinking of the economy.

- It also increases the interest rates, loans and other means by which the people are borrowing or lending money. Thus, hurting regular people more.

- It creates confusion, uncertainty leading to less investment and low international competitiveness.

- It leads to decline in income called as stagnant wage growth.

INFLATION IS NOT HARMFUL

- Inflation is not harmful as it acts as a symptom for growing economy.

- Inflation allows prices of various commodities to adjust according to the budget of the consumers

- It results in people or the seller making good amount of profit which in turn boosts the economy.

CONCLUSION

From the various monetary,fiscal and other measures it becomes clear that to control inflation,the govternment should adopt all measures simultaneously.Inflation is like a hydra-headed monster which should be foughtby using all the weapons at the command of the government.

From the various monetary, fiscal and other measures discussed above, it