As goods and services require more money to purchase, the implicit value of that money falls.
Rise in prices is called inflation. Inflation at very fast rate is Hyper-Inflation, medium is Strato-Inflation and low lever is Creeping inflation.
During the recent years the rise has abnormal and it has endangered the stability of our economy nationally and individually. In Pakistan inflation has become an unending disease to our economy. Once a state is caught in the circle of inflation then it will be difficult for that state to get rid of it.
There are various factors that contribute to the rise in prices. Some are natural factors like unfavorable weather conditions which affect the food production and lead to the shortage of commodities in the market.
With more money chasing fewer goods, the prices take to the wings. Besides this natural problem there are man-made problems like hoarding which contribute to the rapid increase in prices.
The trading community which senses a shorting of certain commodities, especially the essential commodities, they resort to large scale hoarding. They release the hoarding products after increase in the prices and make a neat margin over their investment in the hoarded products.
They get so much profit but it waters inflation. The rise of prices in Pakistan can also be attribute to the despicable acts of traders. Their only motive is to get maximum profit and so they try to charge lots of money from the customers as much as possible.
This has created a class of people who are becoming richer day by day and the other class is becoming poorer.
Hoarding is also playing a bad role in escalation of prices in the commodities One of the most important reasons for inflation is the deficit budgeting. In order to cover the gap Pakistan has been printing more paper currency because foreign aid and taxes can not cover up the deficit.
Therefore there will be greater circulation of paper money. There will be hike in prices of domestic used products as the purchasing power of the people has increased. Wrong taxation policy has also been responsible for the rise in prices.
The hike in taxes results in greater desire to avoid taxes. Thus public takes wrong way of not paying taxes and there will be escalation in prices. The rate of interests has been increased in order to encourage savings and withdraw of currency. The government is making efforts to increase industrial outputs so that the level of consumption is leveled with that of output.
But unfortunately the government has not met with success in getting rid of inflation. The rise in prices goes non-stopped, some suggest that there should be demonetization of currency, but the government thinks that it is an irregular method and will create doubts in the minds of the public about the stability of the government.
The rise in the prices of petrol has affected the prices in our country. So we have to import a huge amount of oil every year. Moreover no step has been taken against the traders who are mainly responsible for unreasonable rise in the prices.Inflation and Its Effects on Investment For world economic markets, inflation is a fairly new experience as for much of the pre-twentieth century there had been little upward pressure on prices due to gold and other metallic standards.
Inflation due to the rise in food and oil prices has caused disastrous results in the world, especially in poor countries. Oil is often demanded but there is little supply. So this is a type of demand-pull inflation. Interest and inflation are key to investing decisions, since they have a direct impact on the investment yield.
When prices rise, the same unit of a currency is able to buy less.
A sustained deterioration in the purchasing power of money is called inflation. Essay about interest rates and inflation . Inflation and Its Effects on Investment For world economic markets, inflation is a fairly new experience as for much of the pre-twentieth century there had been little upward pressure on prices due to gold and other metallic standards.
Inflation and Investment Free Essay, Term Paper and Book Report "Inflation Poses Serious Threats to Government" is an article by Leigh Thomas published by Agence France Presse. It deals with section three in the couse companion, Macroecnomics.
Inflation due to the rise in food and oil prices has caused disastrous results in the world, especially in poor countries. Oil is often demanded but there is little supply.
So this is a type of demand-pull inflation.