eco ppt final
TRANSCRIPT
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Stagflation Stagnation + Inflation = Stagflation
A period where the economy is very slow + Thecontinuous price increases = Unfavorable economic
condition Economy is slowed by unfavorable shock
Ex: Increase of price in oil in oil importing country
Can also result from inappropriate macroeconomic
policies Inflation = excessive growth of money supply
Stagnation = excessive regulation of goods markets and labormarkets.
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HYPERINFLATION
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There are various factors which cause inflation in
the economy -
Monetary Factors
Expansion of Money Supply
Increase in Disposable Income
Increase in Indirect Taxes
Drop in exchange Rate
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Non-monetary Factors
Rising Population
Natural Calamities
Speculation and Black Money
Unfair Practices by Monopoly Houses
Bottlenecks and Shortages
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Structural Factors Capital Shortage
Infrastructural Bottlenecks
Limited Efficient Entrepreneurs
Lack of Foreign Capital
Imperfections of the Market
Unemployment
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Global Factors
Increase in International Prices
Cold War with other countries
Rise in Fuel Prices
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Benefit the cartels formed by the
companies
Benefit borrowers
Farmers Gain In Inflation
Tobin effect
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Hoarding
Increased risk - Higher uncertainties
Distortion of relative prices
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Fixed income recipients will be hurt
Lowers national saving
Rising prices of imports
Income diffusion effect
Illusions of making profits
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Rising prices of imports
Existing creditors will be hurt
Currency debasement
Causes business cycles
Causes an increase in tax bracket
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The Various measures to control inflation are:
1.Monetary Measures
2.Fiscal Measures
3.Physical Measures
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1. Monetary measures
The monetary measures which are
widely used to control inflation aredivided into-
Bank rate policy
Statutory Liquidity Ratio
Open market operation
Repo rate
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Reverse repo rate
Cash Reserve Ratio
Key Rates 2009 April,2010 Dec,2010
CRR 5.75% 6% 6%
Repo rate 5% 5.25% 6.25%
Reverse
Repo rate 3% 3.75% 5.25%
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Selective credit controls
Moral suasion
Credit authorization scheme
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Taxation
Government expenditure
Public borrowings
Protectionist measures
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To Increase Production
Price Control
Rationing
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Food price inflation is one of the most critical economic
problems in the country today.
Lower agricultural growth in India compared to the much
faster GDP growth.
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The high food price inflation is having a significant impact
on the Indian consumer.
The chart below gives the way the Indians spend.
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Lowproduction and productivity
The prevailing market inefficiencies lack of
coordinated efforts in public procurement
Poor distribution
Wastage due to inadequate and poor storage
facilities
Inefficient public distribution system
Speculative trading
Increasing retail margins
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The release of food grain stocks together with
faster distribution.
Part of Foreign Exchange Reserves can be used
for bulk import of essential commodities.
Improving food production and productivity.
Promoting Private sector Participation in Food
grain Management.
Stepping up investments
Foreign Direct Investment (FDI) in food retailing
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JESSY FERNANDES -14
SHRUTI JOSHI 22
AASHIYA KHAN
24 PADMAPRIYA 39
JASVEEN SEHGAL - 46
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