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Sunday, 5 August 2012

Kinds of inflation on the basis of rate and degree






We read types or kinds of inflation on the the basis of rate and stages or degree under these headings :

1. CREEPING INFLATION :-
When price level rises up to rate of 2% per annum we say that it is a creeping inflation. The rise in the general level of prices is very slow. Generally, it is considered necessary for economic growth.

2. WALKING INFLATION :-

In this situation price level rises around 5% annually. It is higher as compared to creeping inflation.

3. RUNNING INFLATION :-
In this situation price level rises 8 to 10% per annum.

4. OPENING INFLATION :-
When prices are left free to rise and Government do not adopt any measures to control inflation. So price level is out of control in this stage.

5. SUPPRESSED INFLATION :-
In this stage the govt. adopts various short term measures to suppress the inflation. Price control and rationing policy is adopted under this inflation.

6. BUDGETARY INFLATION :-
When a Govt. offer a deficit budget and this deficit is met by borrowing and creating new currency. It increases the demand of goods than the supply. So price level rises. It is called budgetary inflation.

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