Inflation in india

In economics, Inflation is a rise in the general level of prices of goods and services in an economy over a period of time Too much money chasing, too few goods. Inflation is a state in which the value of money is falling i.e. price are rising.

Too much inflation will ruin the economy but small levels of inflation will spur growth.
Inflation is very harmful to any economy because it can ruin the economy's development and growth and this is not suppose to be. Inflation is also very harmful to any economy because the people living in that economy might not survive the situation and this is when you see that an economy is affected and if nothing is done to it, it can cause an economy to collapse.

Demand pull inflation:Demand-pull inflation is caused by increases in aggregate demand due to increased private spending, etc. Demand inflation is constructive to a faster rate of economic growth since the excess demand and favourable market conditions will stimulate investment and expansion.

cost-push inflation:Cost-push inflation, also called "supply shock inflation," is caused by a drop in aggregate supply (potential output).

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The 2 ways of measuring inflation

Monetary Measures:Monetary policy rests on the relationship between the rates of interest in an economy, that is, the price at which money can be borrowed, and the total supply of money.these monetary measures include:-

Supply of Money Availability of Money

It refers to government expenditure and revenue collection (taxation) to influence the economy.

Reduction in Unnecessary Expenditure Increase in Taxes Increase in Savings Surplus Budgets

To Increase Production Direct wage controls - Incomes policies Long-term policies to control inflation

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Consumer Price Index

CPI is a measure estimating the average price of consumer goods and services purchased by households.

Wholesale Price Index

WPI is the index that is used to measure the change in the average price level of goods traded in wholesale market
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