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1. INFLATION

2. INFLATION
Inflation - is the rate of upward movement in the
price level for an aggregate of goods and
services
- sustained increased in general price level.
- too much money chasing too few goods.

3. 1. MODERATE OR MILD INFLATION
- this is an inflation of about 3% or less is
acceptable as it acts as a stimulus to
investment, an element of growth.
2. CREEPING INFLATION
-It arisies slowly but continuosly. This kind of
inflation is commonly in developing countries.
3. STAGFLATION
- this refers to an economy that is both stagnant
and has inflation. It means there is inflation
without economic growth.

4. TYPES OF INFLATION
A. DEMAND-PULL INFLATION
- excess of aggregate demand for goods and
services over aggregate supply or the
maximum available outpus in the economy.
- expenditure increase
- export increase
- government spending increase

5. B. COST-PUSH INFLATION
- causes the equilibrium price to rise and the
aggregate output to decline
i. wage push inflation
ii. profit push inflation
iii. import induced inflation

6. EFFECT OF INFLATION
1. LOST OF CONFIDENCE
- lost confidence in the value of money because
of the fall in its value, especially in the
international market.
2. WIDER GAP IN REAL INCOME DISTRIBUTION
-real income measures how many goods can be
purchased with a given money income.

7. 3. Inefficiency in output and decrease in the
quality of output
- this happens when there is demand pull inflation
because high demand for goods decrease the
risk of business.
4. Increase in investment and output
- higher profit due to higher price encourage
firms to invest and product more.

8. ANTI INFLATION MEASURES
• MONETARY POLICIES
• FISCAL POLICIES
• DIRECT CONTROL POLICY