Inflation is a procedure by which the purchase price level is increasing and the money is dropping its value. Inflation happens when volume of money in circulation increases beyond the requirements.
Types of Inflation
Inflation can be categorized on the following base
On the basis of charge of inflation:
Following will be the kinds of inflation on the bases of rate of inflation.
1. creeping inflation
2. strolling inflation
3. running inflation
4. galloping inflation
Once the upsurge in the purchase price level is less than 2% per annum, the inflation is called creeping inflation.
In strolling inflation, the purchase price level increases more fast than in creeping inflation. It may visit 5% p.a.
A broad increase in price range upto 8% to 10% p.a. is called running inflation.
Galloping or hyper inflation:
In a situation wherever price range increases very fast in just a short time period, the inflation is called galloping inflation.
On the basis of degree of control
Inflation is categorized into the following types on the basis of degree of control:
1. start inflation
2. suppressed inflation
The specific situation when inflation gets uncontrollable and can’t be suppressed by the federal government value control or any other related steps.
The specific situation when government is in a position to regulate inflation by its value control policy.
On the basis of Causes
Inflation can be divided into types on the basis of its causes.
1. need take inflation
2. charge drive inflation
3. revenue activated inflation
4. budgetary inflation
5. monetary inflation
6. wage control inflation
7. imported inflation
8. devaluation inflation
Need take inflation:
When need for goods and solutions is a lot more than their present, the purchase price level of the goods and solutions will increase causing need take inflation.
Price drive inflation:
When the expense of creation or the remuneration of facets of creation increases, you will see a rise in rates causing charge drive inflation.
Income activated inflation:
Sometimes the businessmen improve the costs of the services and products only to improve their revenue margin. It causes revenue activated inflation.
Once the government addresses the budget deficit by borrowing money, budgetary inflation will undoubtedly be caused.
Wage control inflation: