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Changes In The Value Of Money

CHANGES IN THE VALUE OF MONEY

Inflation and the causes of inflation

INFLATION
General and persistent rise in prices is known as Inflation

CAUSES OF INFLATION
There are two main types of Causes of Inflation that are Demand Pull and Cost Push.

DEMAND PULL INFLATION
Occurs when aggregate demand exceeds aggregate supply of goods at current prices
Aggregate Demand > Aggregate Supply
Two Reasons:
1. From Demand Side.
2. From Supply Side.

FACTORS OPERATING ON DEMAND SIDE
(1) Increase in money supply.
(2) Increase in government expenditure.
(3) Increase in private expenditure.
(4) Increase in population  demand for goods & if demand is not met prices.
(5) Black money.

FACTORS OPERATING ON SUPPLY SIDE
(1) Lacking Industrial and agriculture Production:
An increase in population, employment, urbanization or income exerts pressure on both sectors and if it can not meet the needs it will rise the prices
(2) Inadequate infrastructure facilities:......


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Approximate Word Count: 608
Approximate Pages: 3 (250 words per double-spaced page)

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