Easy essay on inflation in pakistan

Pakistan Cuts Key Rate by 50 bps. Pakistan Inflation Rate Up to 7. Pakistan Trade Deficit Shrinks in May.

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Subscribe Newsletter. Inflation is a term of economics which means an increase in the prices and fall in the purchasing value of money. It is also called "price hike".

It is the worst of all the problems of a community because it directly hits the poor class. If a company, for example, makes a small amount of goods which are sold over high quantity then he has to increase the prices so that he can manage the product quantity.

Inflation and it's Effects

The Cost-Push inflation theory says that when the cost of making goods which are paid by the company go up, they have to make prices higher to make profit out of selling that product. The higher costs of making goods can include things like workers' wages, taxes to be paid to the government or bigger costs of getting raw materials from other countries.


Causes of inflation | Economics Help

However, Austrian School economists think this is wrong, because if people have to pay higher prices, this just means they have less to spend on other things. Almost everyone thinks excessive inflation is bad. Inflation affects different people in different ways. It also depends on whether inflation is expected or not. If the inflation rate is equal to what most people are expecting anticipated inflation , then we can adjust and the cost is not as high.

For example, banks can change their interest rates and workers can negotiate contracts that include automatic wage hikes as the price level goes up.