Inflation - Rising Prices Outline:
1.Introduction -- What is inflation?
2. Causes of inflation:
(i) Increase (rise) in the demand for goods, supply of goods not increasing
(ii) General rise in the standards of living of the people.
(iii) Increase in the supply of money.
(iv) Rise in prices on international markets.
3. Ways of reducing inflation:
(i)By increasing the production of goods.
(ii) All countries and the UNO to act jointly
(iii) World population growth to be checked.
Inflation is there when the supply of money increases more than the supply of goods. It means increase in money and prices that does not result in increased production of goods There are a number of causes of inflation or rising prices. First of all, when people start using different things more, their prices rise. Secondly, prices of different things rise if their supply becomes less because of strikes of workers increase in the prices of raw materials, monopoly of suppliers closure of factories, floods, absence of rainfall, and so on. Another cause of inflation is the general rise in the standards of living of the people. As the people start living a better life with an increase in their incomes they need more clothes, shoes and other things of daily use. They buy more luxury goods (for comfort and enjoyment) like electric fans heaters, radio and television sets, and so on. Education becomes more common and people begin reading more newspapers, magazines and books. If production increases the cost of production also rises because of the higher wages of labourers and workers, higher prices of raw materials.
The government is often forced to print more currency notes and increase the supply and circulation of money in society. Then it can pay higher salaries, and wages to its workers. But if it cannot increase the production of different goods (as much as it increases the supply of money), prices Suddenly jump. A country may import raw materials for its factories. It may import machines and tools and food items. The prices of all these may be high on world markets. They will then also be high in the country importing them In fact, all countries should take joint steps to check inflation The UNO and other world agencies should try to settle disputes between countries. There should be an atmosphere of peace everywhere. Then countries and nations will work together to increase production and keep prices at a proper level. They will stop spending their resources on preparations for war.
The rise in world population should also be checked. It is difficult to raise the production of different things as fast as the population is increasing. It is necessary to study all the causes of inflation. Then these causes should be removed or eliminated
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