Inflation trend in nepal, causes and remedies
A term paper on
Macroeconomic issues
“INFLATION TREND IN NEPAL
CAUSES AND REMEDIES” (For the partial fulfillment of requirement of MBA program)
January, 2014
1. What is Inflation??
Inflation is the situation of the market disequilibrium in which prices of most of the goods and services persistently rise and the value of the money fall accordingly for relatively longer period of time. Inflation occurs when the amount of the money the purchaser of goods and services want to spend increases rapidly than the value of those goods and services supplied in the market at current prices.
Different economists have defined inflation differently. Some popular definition is given below:
G.Crowther, “Inflation is the state in which the value of money is falling i.e. prices are rising. Inflation is usually associated with rising activities and employment.
According to Milton Friedman, the Nobel Prize winner for economics in 1976, “Inflation is always and everywhere a monetary phenomenon.”
Paul Einzig,”Inflation is that state of disequilibrium in which an expansion of purchasing power tends to cause or effect of an increase in the price level.” In this sense, Inflation is a monetary phenomenon.
H.G Johnson, “Inflation may be defined as an annual rate of increase in the general level of prices. It is measured in the percentage rate. If this rate is increasing per year, Inflation occurs.”
2. Types of Inflation:
Inflation is classified into different types on the basis of speed, nature and causes as follows:
a) Inflation according to speed:
Creeping: 10 – 30% increase in the price level during the period of 10 years.
Walking: 5-7% increase in price level per annum.
Jumping or Running: 10% or 20% increase in price level per annum.
Galloping and Hyperinflation: price level increase at a thousand million % annually.
b) Inflation according to nature
Open inflation: actual rise in price without any government control.
Suppressed
Macroeconomic issues
“INFLATION TREND IN NEPAL
CAUSES AND REMEDIES” (For the partial fulfillment of requirement of MBA program)
January, 2014
1. What is Inflation??
Inflation is the situation of the market disequilibrium in which prices of most of the goods and services persistently rise and the value of the money fall accordingly for relatively longer period of time. Inflation occurs when the amount of the money the purchaser of goods and services want to spend increases rapidly than the value of those goods and services supplied in the market at current prices.
Different economists have defined inflation differently. Some popular definition is given below:
G.Crowther, “Inflation is the state in which the value of money is falling i.e. prices are rising. Inflation is usually associated with rising activities and employment.
According to Milton Friedman, the Nobel Prize winner for economics in 1976, “Inflation is always and everywhere a monetary phenomenon.”
Paul Einzig,”Inflation is that state of disequilibrium in which an expansion of purchasing power tends to cause or effect of an increase in the price level.” In this sense, Inflation is a monetary phenomenon.
H.G Johnson, “Inflation may be defined as an annual rate of increase in the general level of prices. It is measured in the percentage rate. If this rate is increasing per year, Inflation occurs.”
2. Types of Inflation:
Inflation is classified into different types on the basis of speed, nature and causes as follows:
a) Inflation according to speed:
Creeping: 10 – 30% increase in the price level during the period of 10 years.
Walking: 5-7% increase in price level per annum.
Jumping or Running: 10% or 20% increase in price level per annum.
Galloping and Hyperinflation: price level increase at a thousand million % annually.
b) Inflation according to nature
Open inflation: actual rise in price without any government control.
Suppressed