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Abstract
The purpose of this research is to study the existence of inflation in the
economy of Pakistan or relationship with other countries. This research
helps to examine whether inflation hurts or support the economy
consistently or it effect different way in unexpected level. data is used
1991 to 2016 and analysis is made by applying the linear equation. The
research study shows that the current inflation rate impact unfavorably to
the economic growth of country. This study suggested to the policy maker
and state bank of Pakistan to control the inflation if inflation rate is 8%
and keep it constant in the country .Inflation effect the country GDP. If
inflation rate is high then GDP in the country obviously decreases.
regression method helps to define me that there is negative relationship
among GDP, Inflation or interest rate. i also study the relationship of
inflation, interest rate with the foreign direct investment.
Key words:
Inflation ,interest rate , GDP , FDI

INTRODUCTION:
High economic growth decrease the inflation in the country. Inflation is
the most researched topic for the last few years because it discuss about
income allocation . inflation occur due to raise in customer collective
demand is called demand pull inflation. when increase price of factor of
production leads to decrease in supply of goods is called cost push
inflation .high economic growth with no raise in inflation is possible in
demand .when actual output is equal to the expected output there remains
no additional capability and employment level is fully worked in the
economy. high inflation associated with high cost difference