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MEANING OF INFLATION
Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When inflation goes up, there is a decline in the purchasing power of money.
CAUSES OF INFLATION
Too much money chasing too few goods Increase in production cost Taxation Increase in price of imported raw materials Depreciation in exchange rates Decrease in interest rates Rapid economic growth
EFFECTS ON ECONOMY
Increase in the prices of goods and services Decrease in real income It encourages hoarding Decrease in the values of investments It can lead to wage a spiral Lowers the domestic saving rates When inflation becomes very acute, hyper inflation may result
CONCLUSION
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