Galloping inflation: Difference between revisions
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== Overview == | == Overview == | ||
Three primary reasons of inflation are identified by economists: | Three primary reasons of inflation are identified by economists: | ||
* Cost theory | '''* Cost theory | ||
* Demand theory | * Demand theory | ||
* Monetary theory | * Monetary theory''' | ||
According to the '''cost theory''', the rise in production costs that results from wage increases without a corresponding rise in employee productivity is what causes inflation. This particular sort of inflation is also brought on by rising monopolistic firm profits, higher taxes, and rising import prices. On the other hand, the '''demand theory''' postulates that inflation results from a rising in the demand for products and services on a global scale and happens when all the available production resources have been utilized. The '''monetary theory''' holds that the rise in an economy's money supply above the pace of growth in real income is what causes inflation. (Urban, Urbanek, 2015) | According to the '''cost theory''', the rise in production costs that results from wage increases without a corresponding rise in employee productivity is what causes inflation. This particular sort of inflation is also brought on by rising monopolistic firm profits, higher taxes, and rising import prices. On the other hand, the '''demand theory''' postulates that inflation results from a rising in the demand for products and services on a global scale and happens when all the available production resources have been utilized. The '''monetary theory''' holds that the rise in an economy's money supply above the pace of growth in real income is what causes inflation. (Urban, Urbanek, 2015) | ||
Revision as of 13:54, 7 November 2022
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Galloping inflation- The process of steadily rising prices and costs in the economy is known as inflation. As seen by the amount of money and the number of items that can be purchased, inflation reduces the purchasing power of money. When indicators rise by 30–40% annually and inflation rates are growing quickly, this is referred to as galloping inflation or jumping inflation (Urban, Urbanek, 2015), however Paul A. Samuelson stated that the inflation can be perceived as galloping inflation even up to 200% per year, then the hyperinflation starts.
Overview
Three primary reasons of inflation are identified by economists: * Cost theory
- Demand theory
- Monetary theory
According to the cost theory, the rise in production costs that results from wage increases without a corresponding rise in employee productivity is what causes inflation. This particular sort of inflation is also brought on by rising monopolistic firm profits, higher taxes, and rising import prices. On the other hand, the demand theory postulates that inflation results from a rising in the demand for products and services on a global scale and happens when all the available production resources have been utilized. The monetary theory holds that the rise in an economy's money supply above the pace of growth in real income is what causes inflation. (Urban, Urbanek, 2015)
How to fight the inflation
Consequences of galloping inflation
Examples of galloping inflation in history
References
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