Economics

Definition: Indexation is a method by which the prices, wages, and contracts are partially or wholly compensated for any change in the general price level. Indexation is not actually a method to control inflation, but rather is used to adjust monetary incomes with a view to minimizing the undue gains and losses suffered by the different sections of the society because of … [Read more...] about Indexation

Definition: The Price and Wage are the direct measures used to control inflation. In situations, where both the monetary and fiscal policy stands inadequate the price and wage control method is used to tame the situation. The price and wage control are studied conjointly because whatever is the cause of initial inflation, the cost-push and price-push inflation go together. … [Read more...] about Price and Wage Control

Definition: The Fiscal Measures to Control Inflation is comprised of government expenditure, public borrowings, and taxation. The Keynesian economists, also called as “Fiscalist” assert that the demand-pull inflation is caused due to an excess of aggregate demand over aggregate supply. The aggregate demand increases due to expenditure by the households, firms and government … [Read more...] about Fiscal Measures to Control Inflation

Definition: A moderate rate of inflation is considered desirable for the economy, and it varies from country to country and from time to time. As the inflation crosses the desirable rate, several measures to control inflation are undertaken. Often, the countries use monetary measures to keep the situation under control. Monetary Measures to Control Inflation The monetary … [Read more...] about Monetary Measures to Control Inflation

Definition: Inflation refers to the appreciable and persistent rise in the general price level. The economists do believe that the inflation beyond the moderate rate is bad and can be disastrous. Therefore, the inflation must be kept under control. What is a Moderate Rate of Inflation? There is no specific answer to this question. But, however, on the basis of the past … [Read more...] about Measures to Control Inflation

Definition: The Cost-Push Inflation occurs when the price rise due to the increase in the price of factors of production, Viz. Labor, raw materials, and other inputs which are essential for the final production of a product. As a result, the aggregate supply decreases, demand remaining the same, an increase in the price of commodities leads to an overall increase in the general … [Read more...] about Cost-push Inflation

Definition: The Demand-pull Inflation occurs when, for a given level of aggregate supply, the aggregate demand increases substantially. In other words, demand-pull inflation exists when the aggregate demand increases rapidly than the aggregate supply. The increase in aggregate demand may be due to: Monetary Factors, i.e., an increase in the supply of money Real … [Read more...] about Demand-pull Inflation

Definition: The Modern Theories of Inflation follows the theory of price determination. This means the general price level can be determined by aggregate demand and aggregate supply of goods and services. The variations in the general price level are caused by a shift in the aggregate demand and aggregate supply curves. The modern theories of inflation are in fact the blend … [Read more...] about Modern Theories of Inflation

Definition: The Monetarist Theory of Inflation asserts that the general price level rises only due to the increase in the supply of money, but not proportionally. The monetarist theory of inflation relates to the work of Milton Friedman, who tried to revive the classical monetary theory (price level rises with a proportionate change in the supply of money) in a modified … [Read more...] about Monetarist Theory of Inflation

Definition: Inflation refers to a situation that advocates a persistent rise in the general price level of goods and services over a period of time. Theories of Inflation The theories of inflation try to explain the causes of inflation and can be studied from the perspective of: Monetarist Theory of Inflation Modern Theories of Inflation The history of inflation … [Read more...] about Theories of Inflation