INFLATION-Types of Inflation, Causes and Effects of Inflation | Part-1| #ytshorts #upsc #knowledge
Petrol and diesel prices are seeing an all-time high surge in the prices putting a hole in the common man’s pocket. The surge in fuel prices brings inflation everywhere. Be it food, clothing, transport, housing anything.
Let’s discuss what is the reason behind the surge in prices, who controls the pricing, how the fuel prices are decided, why India imports so much oil, is there a hope of price deduction in future. Are electric vehicles a viable option?
Does the government have any power to regulate or change these prices?
Want to know more? Call us now at 99932-02636,0771-4101000 and our team will provide you with all the details.

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Inflation is a term that is commonly used in economics and finance, but what exactly does it mean? In simple terms, inflation refers to the increase in the prices of goods and services over time. This means that the purchasing power of money decreases, and you will need more money to buy the same amount of goods and services.

There are different types of inflation, each with its own causes and effects. Understanding these types can help us grasp the complexities of this economic phenomenon.

1. Demand-pull inflation: This type of inflation occurs when the demand for goods and services exceeds their supply. This can happen when there is an increase in consumer spending, leading to higher prices for goods and services. It can also occur when there is excessive government spending, leading to more money in the economy and driving up prices.

2. Cost-push inflation: Cost-push inflation happens when the production cost of goods and services increases, leading to higher prices. This can be due to factors such as rising wages, increased raw material costs, or higher taxes. When producers are forced to raise prices to cover their increased costs, it leads to cost-push inflation.

3. Built-in inflation: Built-in inflation refers to the self-perpetuating nature of inflation. This occurs when workers demand higher wages to keep up with rising prices, and businesses then pass on the increased labor costs to consumers in the form of higher prices. This cycle of wage increases leading to price increases leads to built-in inflation.

The causes of inflation are varied, and can be influenced by a combination of economic, social, and political factors. Some common causes of inflation include an increase in the money supply, rising production costs, international factors such as changes in exchange rates, and government policies such as deficit spending.

The effects of inflation can be far-reaching and impact individuals, businesses, and the overall economy. For individuals, inflation erodes the purchasing power of their money, leading to a decrease in their standard of living. Businesses may also be negatively affected as higher production costs can reduce their profits. In the broader economy, inflation can lead to a decrease in real GDP growth, as well as instability in financial markets.

In conclusion, inflation is a complex economic phenomenon with various types, causes, and effects. Understanding these dynamics can help individuals and policymakers make informed decisions to mitigate the negative impacts of inflation. Stay tuned for Part-2, where we will delve deeper into the measures to control inflation and its impact on different sectors of the economy.