The first of these is the growth of the population's incomes, which is not supported by a corresponding increase in the production of goods, which results in an imbalance between supply and demand for goods and services, which drives up prices and increases inflation rate. This imbalance between supply and demand for goods and services can also be caused by cr
Inflation can come in many different forms; for example, in a regulated economy (like the one that existed in the USSR) or during times of war, when prices are fixed, it can have a hidden character; this is known as suppressed inflation; it is followed by a shortage of many goods, a rise in shadow trade, a sharp increase in market prices, etc. However, the rejection of such regulation (following the war or in nations that have switched from an administratively regulated to a
The additional inflationary forms include:
- Administrative inflation, or price increases brought on by ""administratively"" operated pricing;
- Galloping inflation, or inflation manifested as a jerky rise in prices;
- Hyperinflation, which is inflation with an extremely rapid pace of price growth;
- Built-in inflation, which is defined by the average level over a specific time period;
- Imported inflation, which is inflation brought on by factors from outside the country, such as an excessive influx of foreign cash and an increase in import prices;
-Induced inflation, or inflation brought on by the impact of external or economic forces;
- Credit inflation, or inflation brought on by an excessive increase of credit;
- Unexpected inflation, which is the rate of inflation that has exceeded expectations for a specific time period;
- Expected inflation, which is the expected rate of inflation in a future period as a result of current-period causes;
- Open inflation, which is inflation brought on by rising consumer and production resource prices;
Effects of High Inflation in the Bad
The depreciation of income reduces opportunities and undermines savings incentives, interfering with the formation of a stable financial foundation for investment. High inflation is also accompanied by increased uncertainty, which makes it more difficult for economic entities to make decisions. All economic entities experience a decrease in purchasing power, which has a negative impact on demand, economic growth, population standards of living, and societal moods.
How do you reduce?
Fighting inflation is extremely difficult, as the experience of developed nations demonstrates. It may seem simple to introduce some form of price regulation or freeze prices, but these measures are only effective for a limited period of time, as the freezing of prices will soon be accompanied by an increase in the goods deficit, which will further exacerbate inflation. The other method of fighting inflation is through contractionary monetary policy, which aims to reduce the amount of money in circulation."""