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Essay on inflation/Rising prices in Pakistan with quotations

Rising prices / inflation essay 300 - 400 words.

Inflation essay for 2nd year, class 12 PDF download

Inflation is taxation without legislation - Milton Friedman

Inflation is the crabgrass in your savings - Robert Orben

Inflation is the parent of unemployment and the unseen robber of those who have saved - Margret Thatcher

Production is the only answer to inflation - Anonymous

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Essay on Inflation: Types, Causes and Effects

Essay on Inflation!

Essay on the Meaning of Inflation:

Inflation and unemployment are the two most talked-about words in the contemporary society. These two are the big problems that plague all the economies. Almost everyone is sure that he knows what inflation exactly is, but it remains a source of great deal of confusion because it is difficult to define it unambiguously.

Inflation is often defined in terms of its supposed causes. Inflation exists when money supply exceeds available goods and services. Or inflation is attributed to budget deficit financing. A deficit budget may be financed by additional money creation. But the situation of monetary expansion or budget deficit may not cause price level to rise. Hence the difficulty of defining ‘inflation’ .

Inflation may be defined as ‘a sustained upward trend in the general level of prices’ and not the price of only one or two goods. G. Ackley defined inflation as ‘a persistent and appreciable rise in the general level or average of prices’ . In other words, inflation is a state of rising price level, but not rise in the price level. It is not high prices but rising prices that constitute inflation.

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It is an increase in the overall price level. A small rise in prices or a sudden rise in prices is not inflation since these may reflect the short term workings of the market. It is to be pointed out here that inflation is a state of disequilibrium when there occurs a sustained rise in price level.

It is inflation if the prices of most goods go up. However, it is difficult to detect whether there is an upward trend in prices and whether this trend is sustained. That is why inflation is difficult to define in an unambiguous sense.

Let’s measure inflation rate. Suppose, in December 2007, the consumer price index was 193.6 and, in December 2008 it was 223.8. Thus the inflation rate during the last one year was 223.8 – 193.6/193.6 × 100 = 15.6%.

As inflation is a state of rising prices, deflation may be defined as a state of falling prices but not fall in prices. Deflation is, thus, the opposite of inflation, i.e., rise in the value or purchasing power of money. Disinflation is a slowing down of the rate of inflation.

Essay on the Types of Inflation :

As the nature of inflation is not uniform in an economy for all the time, it is wise to distinguish between different types of inflation. Such analysis is useful to study the distributional and other effects of inflation as well as to recommend anti-inflationary policies.

Inflation may be caused by a variety of factors. Its intensity or pace may be different at different times. It may also be classified in accordance with the reactions of the government toward inflation.

Thus, one may observe different types of inflation in the contemporary society:

(a) According to Causes:

i. Currency Inflation:

This type of inflation is caused by the printing of currency notes.

ii. Credit Inflation:

Being profit-making institutions, commercial banks sanction more loans and advances to the public than what the economy needs. Such credit expansion leads to a rise in price level.

iii. Deficit-Induced Inflation:

The budget of the government reflects a deficit when expenditure exceeds revenue. To meet this gap, the government may ask the central bank to print additional money. Since pumping of additional money is required to meet the budget deficit, any price rise may be called deficit-induced inflation.

iv. Demand-Pull Inflation:

An increase in aggregate demand over the available output leads to a rise in the price level. Such inflation is called demand-pull inflation (henceforth DPI). But why does aggregate demand rise? Classical economists attribute this rise in aggregate demand to money supply.

If the supply of money in an economy exceeds the available goods and services, DPI appears. It has been described by Coulborn as a situation of “too much money chasing too few goods” .

Note that, in this region, price level begins to rise. Ultimately, the economy reaches full employment situation, i.e., Range 3, where output does not rise but price level is pulled upward. This is demand-pull inflation. The essence of this type of inflation is “too much spending chasing too few goods.”

v. Cost-Push Inflation:

Inflation in an economy may arise from the overall increase in the cost of production. This type of inflation is known as cost-push inflation (henceforth CPI). Cost of production may rise due to increase in the price of raw materials, wages, etc. Often trade unions are blamed for wage rise since wage rate is not market-determined. Higher wage means higher cost of production.

Prices of commodities are thereby increased. A wage-price spiral comes into operation. But, at the same time, firms are to be blamed also for the price rise since they simply raise prices to expand their profit margins. Thus we have two important variants of CPI: wage-push inflation and profit-push inflation. Anyway, CPI stems from the leftward shift of the aggregate supply curve.

The price level thus determined is OP 1 . As aggregate demand curve shifts to AD 2 , price level rises to OP 2 . Thus, an increase in aggregate demand at the full employment stage leads to an increase in price level only, rather than the level of output. However, how much price level will rise following an increase in aggregate demand depends on the slope of the AS curve.

Causes of Demand-Pull Inflation :

DPI originates in the monetary sector. Monetarists’ argument that “only money matters” is based on the assumption that at or near full employment, excessive money supply will increase aggregate demand and will thus cause inflation.

An increase in nominal money supply shifts aggregate demand curve rightward. This enables people to hold excess cash balances. Spending of excess cash balances by them causes price level to rise. Price level will continue to rise until aggregate demand equals aggregate supply.

Keynesians argue that inflation originates in the non-monetary sector or the real sector. Aggregate demand may rise if there is an increase in consumption expenditure following a tax cut. There may be an autonomous increase in business investment or government expenditure. Governmental expenditure is inflationary if the needed money is procured by the government by printing additional money.

In brief, an increase in aggregate demand i.e., increase in (C + I + G + X – M) causes price level to rise. However, aggregate demand may rise following an increase in money supply generated by the printing of additional money (classical argument) which drives prices upward. Thus, money plays a vital role. That is why Milton Friedman believes that inflation is always and everywhere a monetary phenomenon.

There are other reasons that may push aggregate demand and, hence, price level upwards. For instance, growth of population stimulates aggregate demand. Higher export earnings increase the purchasing power of the exporting countries.

Additional purchasing power means additional aggregate demand. Purchasing power and, hence, aggregate demand, may also go up if government repays public debt. Again, there is a tendency on the part of the holders of black money to spend on conspicuous consumption goods. Such tendency fuels inflationary fire. Thus, DPI is caused by a variety of factors.

Cost-Push Inflation Theory :

In addition to aggregate demand, aggregate supply also generates inflationary process. As inflation is caused by a leftward shift of the aggregate supply, we call it CPI. CPI is usually associated with the non-monetary factors. CPI arises due to the increase in cost of production. Cost of production may rise due to a rise in the cost of raw materials or increase in wages.

Such increases in costs are passed on to consumers by firms by raising the prices of the products. Rising wages lead to rising costs. Rising costs lead to rising prices. And rising prices, again, prompt trade unions to demand higher wages. Thus, an inflationary wage-price spiral starts.

This causes aggregate supply curve to shift leftward. This can be demonstrated graphically (Fig. 11.4) where AS 1 is the initial aggregate supply curve. Below the full employment stage this AS curve is positive sloping and at full employment stage it becomes perfectly inelastic. Intersection point (E 1 ) of AD 1 and AS 1 curves determines the price level.

Now, there is a leftward shift of aggregate supply curve to AS 2 . With no change in aggregate demand, this causes price level to rise to OP 2 and output to fall to OY 2 .

With the reduction in output, employment in the economy declines or unemployment rises. Further shift in the AS curve to AS 2 results in higher price level (OP 3 ) and a lower volume of aggregate output (OY 3 ). Thus, CPI may arise even below the full employment (Y f ) stage.

Causes of CPI :

It is the cost factors that pull the prices upward. One of the important causes of price rise is the rise in price of raw materials. For instance, by an administrative order the government may hike the price of petrol or diesel or freight rate. Firms buy these inputs now at a higher price. This leads to an upward pressure on cost of production.

Not only this, CPI is often imported from outside the economy. Increase in the price of petrol by OPEC compels the government to increase the price of petrol and diesel. These two important raw materials are needed by every sector, especially the transport sector. As a result, transport costs go up resulting in higher general price level.

Again, CPI may be induced by wage-push inflation or profit-push inflation. Trade unions demand higher money wages as a compensation against inflationary price rise. If increase in money wages exceeds labour productivity, aggregate supply will shift upward and leftward. Firms often exercise power by pushing up prices independently of consumer demand to expand their profit margins.

Fiscal policy changes, such as an increase in tax rates leads to an upward pressure in cost of production. For instance, an overall increase in excise tax of mass consumption goods is definitely inflationary. That is why government is then accused of causing inflation.

Finally, production setbacks may result in decreases in output. Natural disaster, exhaustion of natural resources, work stoppages, electric power cuts, etc., may cause aggregate output to decline.

In the midst of this output reduction, artificial scarcity of any goods by traders and hoarders just simply ignite the situation.

Inefficiency, corruption, mismanagement of the economy may also be the other reasons. Thus, inflation is caused by the interplay of various factors. A particular factor cannot be held responsible for inflationary price rise.

Essay on the Effects of Inflation :

People’s desires are inconsistent. When they act as buyers they want prices of goods and services to remain stable but as sellers they expect the prices of goods and services should go up. Such a happy outcome may arise for some individuals; “but, when this happens, others will be getting the worst of both worlds.” Since inflation reduces purchasing power it is bad.

The old people are in the habit of recalling the days when the price of say, meat per kilogram cost just 10 rupees. Today it is Rs. 250 per kilogram. This is true for all other commodities. When they enjoyed a better living standard. Imagine today, how worse we are! But meanwhile, wages and salaries of people have risen to a great height, compared to the ‘good old days’. This goes unusually untold.

When price level goes up, there is both a gainer and a loser. To evaluate the consequence of inflation, one must identify the nature of inflation which may be anticipated and unanticipated. If inflation is anticipated, people can adjust with the new situation and costs of inflation to the society will be smaller.

In reality, people cannot predict accurately future events or people often make mistakes in predicting the course of inflation. In other words, inflation may be unanticipated when people fail to adjust completely. This creates various problems.

One can study the effects of unanticipated inflation under two broad headings:

(i) Effect on distribution of income and wealth

(ii) Effect on economic growth.

(a) Effects of Inflation on Income and Wealth Distribution :

During inflation, usually people experience rise in incomes. But some people gain during inflation at the expense of others. Some individuals gain because their money incomes rise more rapidly than the prices and some lose because prices rise more rapidly than their incomes during inflation. Thus, it redistributes income and wealth.

Though no conclusive evidence can be cited, it can be asserted that following categories of people are affected by inflation differently:

i. Creditors and Debtors:

Borrowers gain and lenders lose during inflation because debts are fixed in rupee terms. When debts are repaid their real value declines by the price level increase and, hence, creditors lose. An individual may be interested in buying a house by taking a loan of Rs. 7 lakh from an institution for 7 years.

The borrower now welcomes inflation since he will have to pay less in real terms than when it was borrowed. Lender, in the process, loses since the rate of interest payable remains unaltered as per agreement. Because of inflation, the borrower is given ‘dear’ rupees, but pays back ‘cheap’ rupees.

However, if in an inflation-ridden economy creditors chronically loose, it is wise not to advance loans or to shut down business. Never does it happen. Rather, the loan- giving institution makes adequate safeguard against the erosion of real value.

ii. Bond and Debenture-Holders:

In an economy, there are some people who live on interest income—they suffer most.

Bondholders earn fixed interest income:

These people suffer a reduction in real income when prices rise. In other words, the value of one’s savings decline if the interest rate falls short of inflation rate. Similarly, beneficiaries from life insurance programmes are also hit badly by inflation since real value of savings deteriorate.

iii. Investors:

People who put their money in shares during inflation are expected to gain since the possibility of earning business profit brightens. Higher profit induces owners of firms to distribute profit among investors or shareholders.

iv. Salaried People and Wage-Earners:

Anyone earning a fixed income is damaged by inflation. Sometimes, unionized worker succeeds in raising wage rates of white-collar workers as a compensation against price rise. But wage rate changes with a long time lag. In other words, wage rate increases always lag behind price increases.

Naturally, inflation results in a reduction in real purchasing power of fixed income earners. On the other hand, people earning flexible incomes may gain during inflation. The nominal incomes of such people outstrip the general price rise. As a result, real incomes of this income group increase.

v. Profit-Earners, Speculators and Black Marketeers:

It is argued that profit-earners gain from inflation. Profit tends to rise during inflation. Seeing inflation, businessmen raise the prices of their products. This results in a bigger profit. Profit margin, however, may not be high when the rate of inflation climbs to a high level.

However, speculators dealing in business in essential commodities usually stand to gain by inflation. Black marketeers are also benefited by inflation.

Thus, there occurs a redistribution of income and wealth. It is said that rich becomes richer and poor becomes poorer during inflation. However, no such hard and fast generalizations can be made. It is clear that someone wins and someone loses from inflation.

These effects of inflation may persist if inflation is unanticipated. However, the redistributive burdens of inflation on income and wealth are most likely to be minimal if inflation is anticipated by the people.

With anticipated inflation, people can build up their strategies to cope with inflation. If the annual rate of inflation in an economy is anticipated correctly people will try to protect them against losses resulting from inflation.

Workers will demand 10 p.c. wage increase if inflation is expected to rise by 10 p.c. Similarly, a percentage of inflation premium will be demanded by creditors from debtors. Business firms will also fix prices of their products in accordance with the anticipated price rise. Now if the entire society “learns to live with inflation” , the redistributive effect of inflation will be minimal.

However, it is difficult to anticipate properly every episode of inflation. Further, even if it is anticipated it cannot be perfect. In addition, adjustment with the new expected inflationary conditions may not be possible for all categories of people. Thus, adverse redistributive effects are likely to occur.

Finally, anticipated inflation may also be costly to the society. If people’s expectation regarding future price rise become stronger they will hold less liquid money. Mere holding of cash balances during inflation is unwise since its real value declines. That is why people use their money balances in buying real estate, gold, jewellery, etc.

Such investment is referred to as unproductive investment. Thus, during inflation of anticipated variety, there occurs a diversion of resources from priority to non-priority or unproductive sectors.

b. Effect on Production and Economic Growth :

Inflation may or may not result in higher output. Below the full employment stage, inflation has a favourable effect on production. In general, profit is a rising function of the price level. An inflationary situation gives an incentive to businessmen to raise prices of their products so as to earn higher doses of profit.

Rising price and rising profit encourage firms to make larger investments. As a result, the multiplier effect of investment will come into operation resulting in higher national output. However, such a favourable effect of inflation will be temporary if wages and production costs rise very rapidly.

Further, inflationary situation may be associated with the fall in output, particularly if inflation is of the cost-push variety. Thus, there is no strict relationship between prices and output. An increase in aggregate demand will increase both prices and output, but a supply shock will raise prices and lower output.

Inflation may also lower down further production levels. It is commonly assumed that if inflationary tendencies nurtured by experienced inflation persist in future, people will now save less and consume more. Rising saving propensities will result in lower further outputs.

One may also argue that inflation creates an air of uncertainty in the minds of business community, particularly when the rate of inflation fluctuates. In the midst of rising inflationary trend, firms cannot accurately estimate their costs and revenues. Under the circumstance, business firms may be deterred in investing. This will adversely affect the growth performance of the economy.

However, slight dose of inflation is necessary for economic growth. Mild inflation has an encouraging effect on national output. But it is difficult to make the price rise of a creeping variety. High rate of inflation acts as a disincentive to long run economic growth. The way the hyperinflation affects economic growth is summed up here.

We know that hyperinflation discourages savings. A fall in savings means a lower rate of capital formation. A low rate of capital formation hinders economic growth. Further, during excessive price rise, there occurs an increase in unproductive investment in real estate, gold, jewellery, etc.

Above all, speculative businesses flourish during inflation resulting in artificial scarcities and, hence, further rise in prices. Again, following hyperinflation, export earnings decline resulting in a wide imbalance in the balance of payments account.

Often, galloping inflation results in a ‘flight’ of capital to foreign countries since people lose confidence and faith over the monetary arrangements of the country, thereby resulting in a scarcity of resources. Finally, real value of tax revenue also declines under the impact of hyperinflation. Government then experiences a shortfall in investible resources.

Thus, economists and policy makers are unanimous regarding the dangers of high price rise. But the consequence of hyperinflation is disastrous. In the past, some of the world economies (e.g., Germany after the First World War (1914-1918), Latin American countries in the 1980s) had been greatly ravaged by hyperinflation.

The German Inflation of 1920s was also Catastrophic:

During 1922, the German price level went up 5,470 per cent, in 1923, the situation worsened; the German price level rose 1,300,000,000 times. By October of 1923, the postage of the lightest letter sent from Germany to the United States was 200,000 marks.

Butter cost 1.5 million marks per pound, meat 2 million marks, a loaf of bread 200,000 marks, and an egg 60,000 marks Prices increased so rapidly that waiters changed the prices on the menu several times during the course of a lunch!! Sometimes, customers had to pay double the price listed on the menu when they observed it first!!!

During October 2008, Zimbabwe, under the President-ship of Robert G. Mugabe, experienced 231,000,000 p.c. (2.31 million p.c.) as against 1.2 million p.c. price rise in September 2008—a record after 1923. It is an unbelievable rate. In May 2008, the cost of price of a toilet paper itself and not the costs of the roll of the toilet paper came to 417 Zimbabwean dollars.

Anyway, people are harassed ultimately by the high rate of inflation. That is why it is said that ‘inflation is our public enemy number one’. Rising inflation rate is a sign of failure on the part of the government.

Related Articles:

• Essay on the Causes of Inflation (473 Words)
• Cost-Push Inflation and Demand-Pull or Mixed Inflation
• Demand Pull Inflation and Cost Push Inflation | Money
• Essay on Inflation: Meaning, Measurement and Causes

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Inflation Quotes

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If inflation continues to soar, you're going to have to work like a dog just to live like one

Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.

By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.

Inflation is taxation without legislation.

The consequences of inflation are malinvestment, waste, a wanton redistribution of wealth and income, the growth of speculation and gambling, immorality and corruption, disillusionment, social resentment, discontent, upheaval and riots, bankruptcy, increased government controls, and eventual collapse.

If the governments devalue the currency in order to betray all creditors, you politely call this procedure 'inflation'.

There are two main drivers of asset class returns - inflation and growth.

Inflation is the parent of unemployment and the unseen robber of those who have saved.

The lesson is clear. Inflation devalues us all.

Inflation is like toothpaste. Once it's out, you can hardly get it back in again.

The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.

Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output... A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society.

Government has no wealth, and when a politician promises to give you something for nothing, he must first confiscate that wealth from you -- either by direct taxes, or by the cruelly indirect tax of inflation.

Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.

Inflation is not only unnecessary for economic growth. As long as it exists it is the enemy of economic growth.

It is a way to take people's wealth from them without having to openly raise taxes. Inflation is the most universal tax of all.

Nothing so weakens government as persistent inflation.

Increases in money supply are what constitute inflation, and a general rise in prices is the symptom.

Americans are getting stronger. Twenty years ago, it took two people to carry ten dollars' worth of groceries. Today, a five-year-old can do it.

Continued inflation inevitably leads to catastrophe.

Listening to Democrats complain about inflation is like listening to germs complain about disease.

Rapid increases in the quantity of money produce inflation. Sharp decreases produce depression.

Things there are no solution to: Inflation, bureaucracy & dandruff.

Whoever controls the volume of money in our country is absolute master of all industry and commerce...when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.

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Inflation quotes by:

• Milton Friedman Economist
• John Maynard Keynes Economist
• Alan Greenspan Economist
• Ludwig von Mises Philosopher
• Martin Feldstein Former Chairman of Council of Economic Advisers
• William Vickrey Nobel prize winner
• Ronald Reagan 40th U.S. President
• Friedrich August von Hayek Economist
• Paul Volcker Economist
• Barack Obama 44th U.S. President
• John W. Snow Former United States Secretary of the Treasury
• Warren Buffett Investor
• Suze Orman Author
• Murray Rothbard Economist
• Henry Hazlitt Journalist
• John Kenneth Galbraith Economist
• James Surowiecki Journalist
• Robert Reich Former United States Secretary of Labor
• Janet Yellen Economist
• Ben Bernanke Economist

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Economic essays on inflation

• Definition – Inflation – Inflation is a sustained rise in the cost of living and average price level.
• Causes Inflation – Inflation is caused by excess demand in the economy, a rise in costs of production, rapid growth in the money supply.

• Costs of Inflation – Inflation causes decline in value of savings, uncertainty, confusion and can lead to lower investment.

• Problems measuring inflation – why it can be hard to measure inflation with changing goods.
• Different types of inflation – cost-push inflation, demand-pull inflation, wage-price spiral,
• How to solve inflation . Policies to reduce inflation, including monetary policy, fiscal policy and supply-side policies.
• Trade off between inflation and unemployment . Is there a trade-off between the two, as Phillips Curve suggests?
• The relationship between inflation and the exchange rate – Why high inflation can lead to a depreciation in the exchange rate.
• What should the inflation target be? – Why do government typically target inflation of 2%
• Deflation – why falling prices can lead to negative economic growth.
• Monetarist Theory – Monetarist theory of inflation emphasises the role of the money supply.
• Criticisms of Monetarism – A look at whether the monetarist theory holds up to real-world scenarios.
• Money Supply   – What the money supply is.
• Can we have economic growth without inflation?
• Predicting inflation
• Link between inflation and interest rates
• Should low inflation be the primary macroeconomic objective?

See also notes on Unemployment

Home — Essay Samples — Economics — Political Economy — Inflation

Essays on Inflation

Inflation essay topics and outline examples, essay title 1: understanding inflation: causes, effects, and economic policy responses.

Thesis Statement: This essay provides a comprehensive analysis of inflation, exploring its root causes, the economic and societal effects it generates, and the various policy measures employed by governments and central banks to manage and mitigate inflationary pressures.

• Introduction
• Defining Inflation: Concept and Measurement
• Causes of Inflation: Demand-Pull, Cost-Push, and Monetary Factors
• Effects of Inflation on Individuals, Businesses, and the Economy
• Inflationary Policies: Central Bank Actions and Government Interventions
• Case Studies: Historical Inflationary Periods and Their Consequences
• Challenges in Inflation Management: Balancing Growth and Price Stability

Essay Title 2: Inflation and Its Impact on Consumer Purchasing Power: A Closer Look at the Cost of Living

Thesis Statement: This essay focuses on the effects of inflation on consumer purchasing power, analyzing how rising prices affect the cost of living, household budgets, and the strategies individuals employ to cope with inflation-induced challenges.

• Inflation's Impact on Prices: Understanding the Cost of Living Index
• Consumer Behavior and Inflation: Adjustments in Spending Patterns
• Income Inequality and Inflation: Examining Disparities in Financial Resilience
• Financial Planning Strategies: Savings, Investments, and Inflation Hedges
• Government Interventions: Indexation, Wage Controls, and Social Programs
• The Global Perspective: Inflation in Different Economies and Regions

Essay Title 3: Hyperinflation and Economic Crises: Case Studies and Lessons from History

Thesis Statement: This essay explores hyperinflation as an extreme form of inflation, examines historical case studies of hyperinflationary crises, and draws lessons on the devastating economic and social consequences that result from unchecked inflationary pressures.

• Defining Hyperinflation: Thresholds and Characteristics
• Case Study 1: Weimar Republic (Germany) and the Hyperinflation of 1923
• Case Study 2: Zimbabwe's Hyperinflationary Collapse in the Late 2000s
• Impact on Society: Currency Devaluation, Poverty, and Social Unrest
• Responses and Recovery: Stabilizing Currencies and Rebuilding Economies
• Preventative Measures: Policies to Avoid Hyperinflationary Crises

Inflation Reduction Act in The Frame of Macroeconomic Challenges

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Inflation English Essay with Quotations in Pakistan

Table of Contents

Inflation English Essay with Quotations pdf Download: The PDF version of the second-year English smart syllabus essays is now available for students to access. Those who are searching for individual essays on specific topics can refer to the list of essays designed for class 12. In particular, I have shared an exceptional essay on the issue of inflation or rising prices in Pakistan that you may find helpful.

Inflation English Essay Headings

I. introduction.

• Definition of inflation and its impact
• Overview of inflation in Pakistan

Inflation is a significant economic issue that affects individuals, businesses, and the country as a whole. Pakistan, like many developing countries, has struggled with inflation in recent years. In this essay, we will explore the causes and consequences of inflation in Pakistan, as well as some potential solutions to the problem.

II. Causes of Inflation in Pakistan

• Rising oil prices
• Government policies
• Currency devaluation
• Global economic factors

Firstly, the main causes of inflation in Pakistan are rising oil prices, government policies, currency devaluation, and global economic factors. Rising oil prices have a direct impact on the prices of goods and services, which leads to higher inflation rates. Government policies such as excessive money printing and high taxation can also lead to inflation, as they increase the cost of production and decrease the purchasing power of individuals. Currency devaluation can also cause inflation as it increases the cost of imported goods and services. Finally, global economic factors such as the COVID-19 pandemic have contributed to inflation in Pakistan due to supply chain disruptions and higher demand for certain goods and services.

III. Consequences of Inflation in Pakistan

• Decreased purchasing power
• Higher production costs
• Political instability

The consequences of inflation in Pakistan are severe and far-reaching. High inflation rates reduce the purchasing power of individuals, leading to a decrease in their standard of living. It also makes it more difficult for businesses to operate, as they have to contend with higher production costs. In addition, inflation can lead to political instability, as citizens become dissatisfied with the government’s inability to control prices.

IV. Solutions to Combat Inflation in Pakistan

• Increasing interest rates
• Reducing government spending
• Policies promoting economic growth

To combat inflation, the government can take various measures, including increasing interest rates, reducing government spending, and implementing policies that promote economic growth. As the famous economist John Maynard Keynes said, “Inflation is unjust, deflation is inexpedient. Of the two, deflation is worse.” This implies that it is better to tackle inflation through monetary and fiscal policy rather than deflation.

V. Quotations on Inflation in Pakistan

• “Inflation is taxation without legislation” – Milton Friedman
• “Inflation is the crabgrass in your savings” – Robert Orben

VI. Conclusion

• Summary of the main points
• Call to action to address inflation in Pakistan.

In conclusion, inflation is a significant issue in Pakistan that affects the country’s economic stability and citizens’ standard of living. The government must take steps to address inflation and implement policies that promote economic growth and stability. As the former Prime Minister of Pakistan, Shaukat Aziz, said, “Inflation is the enemy of progress and the friend of ignorance.” It is imperative that Pakistan takes this issue seriously and works to combat it.

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Essay on Inflation in Pakistan for Students

by Pakiology | Mar 22, 2024 | Essay | 0 comments

In this essay on inflation in Pakistan, we will look at the causes, effects, and solutions to this issue that has been affecting the country for decades. The term ‘inflation’ refers to a sustained rise in the prices of goods and services in an economy. In Pakistan, inflation has been a major concern since the late 1990s, with the Consumer Price Index (CPI) reaching a peak in 2023. We will explore the various factors that have contributed to inflation in Pakistan, its economic effects, and what can be done to address the issue.

Page Contents

Essay on Inflation Outlines

Causes of inflation in pakistan, effects of inflation, solution to control inflation.

• Introduction

Inflation in Pakistan is caused by several factors, which can be divided into two main categories: domestic and external. The main domestic causes of inflation are an increase in money supply, an increase in government spending, an increase in indirect taxes, and a decrease in economic growth.

The most significant contributor to inflation in Pakistan is an increase in the money supply. When there is too much money chasing after too few goods, prices rise, creating a situation known as demand-pull inflation. An increase in the money supply can be caused by the central bank printing more money or by the government borrowing more money from the public.

In addition, higher government spending can lead to inflation. This occurs when the government prints more money to finance its expenditure or borrows from the public and transfers the cost of this additional spending to businesses and consumers. This leads to higher prices for goods and services. Indirect taxes are another major factor that contributes to inflation in Pakistan. When indirect taxes are increased, prices of goods and services also increase, leading to an overall rise in prices.

Finally, low economic growth can also cause inflation in Pakistan. A weak economy reduces people’s purchasing power, forcing them to buy less, which reduces demand and leads to lower prices. However, when economic growth stalls, businesses are unable to sell their products at the same price as before, leading to a rise in prices.

Overall, inflation in Pakistan is caused by a combination of domestic and external factors. These include an increase in money supply, higher government spending, increases in indirect taxes, and a decrease in economic growth.

The effects of inflation on the economy can be both positive and negative. Inflation erodes the purchasing power of money, meaning that each unit of currency is worth less than it was before. This means that, as the cost of living increases, people can purchase fewer goods and services for the same amount of money. As a result, their standard of living decreases.

Inflation also reduces the real return on investments and savings, which can have a detrimental effect on economic growth. When inflation is high, people prefer to save their money rather than invest in a business or other activities. This reduces the availability of capital and results in slower economic growth.

In addition to decreasing standards of living, inflation can lead to unemployment if companies are not able to increase wages at the same rate as prices rise. This can lead to an increase in poverty, as people struggle to afford necessities. Furthermore, when prices rise faster than wages, it puts pressure on government budgets and can increase public debt.

Inflation can also cause the value of the local currency to depreciate against foreign currencies. This has a direct impact on the cost of imports and makes domestic goods less competitive in international markets. It can also have an indirect impact on exports, as it reduces the competitiveness of local producers in foreign markets.

Inflation is a serious issue in Pakistan, and it needs to be addressed to improve the country’s economic conditions. The following are some of the measures that can be taken to control inflation in Pakistan:

1. Fiscal policy: A strong fiscal policy is necessary for controlling inflation. The government should increase its revenue by implementing taxes on the wealthy and reducing public spending. This will help reduce budget deficits, which will result in lower inflation.

2. Monetary policy: The State Bank of Pakistan should adopt a tighter monetary policy to control inflation. It should raise interest rates so that investors have an incentive to save rather than spend, thus curbing demand-pull inflation.

3. Supply-side measures: There should be an increase in the production of essential commodities and products to meet the demand of consumers. This will help reduce prices and inflation in the long run.

4. Subsidies: The government should provide subsidies to those who are suffering due to the high prices of essential items. This will help them cope with the rising cost of living and ensure that they have access to essential goods and services.

5. Stabilizing exchange rate: A stable exchange rate between foreign currencies and the rupee is necessary for controlling inflation. The State Bank of Pakistan should strive to keep the rupee’s value stable by using currency swaps and other methods.

These measures can go a long way in controlling inflation in Pakistan. By taking these measures, the government can help improve the country’s economic condition and create an environment conducive to investment and growth.

What is inflation in simple words?

Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.

What are the 4 main causes of inflation?

The 4 main causes of inflation are: Demand-pull inflation: when there is an increase in demand for goods and services that outstrip the economy’s ability to produce them. Cost-push inflation: when the cost of production increases, causing companies to raise prices to maintain their profit margins. Built-in inflation: when businesses expect prices to rise and build that expectation into their prices, causing a self-fulfilling cycle of inflation. Imported inflation: when the cost of imported goods increases, leading to higher prices for consumers.

What are the 5 main causes of inflation?

The 4 main causes of inflation are: 1. Demand-pull inflation 2. Cost-push inflation 3. Built-in inflation 4. Imported inflation 5. Monetary inflation

What is inflation introduction?

Inflation is a phenomenon that has been observed throughout history. It refers to the sustained increase in the general price level of goods and services in an economy over a period of time.

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Top 20 Quotations for Inflation Essay or Rising Prices Essay

In this post, you will get the top 20 Quotations for Inflation Essay for FSC 2nd Year Students. I always try to post easy quotations on ilmihub . You can check this list of Quotations for Essays and take your required essay quotations. However, students who need complete essays can visit Essays with Quotes . An essay on Inflation with quotations has already been posted at this link .

Students of Class 12, FSC 2nd Part can write the same Inflation essay quotations in Essay on Price Hike or Essay on Increasing Prices . You can choose 3 to 4 essay quotations that are most appropriate as per the length of your essay.

Price Hike or Inflation Essay Quotes for 2nd Year, Class 10 and Class 12

• “During inflation, Goodwill is the gift that keeps on giving.” – (Warren Buffett)
• “Inflation is taxation without legislation.” – (Milton Friedman)
• “The Debasement of World Currency: It Is Inflation, But Not As We Know It.” – (Chris Powell)
• “I don’t mind going back to daylight saving time. With inflation, the hour will be the only thing I’ve saved all year.” – (Victor Borge)
• “Inflation is a monetary phenomenon. It is made by or stopped by the central bank.” – (Milton Friedman)
• “Production is the only answer to inflation.” – (Chester Bowles)
• “Inflation is the crabgrass in your savings” – (Robert Orben)
• “Inflation is taking up the poverty line, and poverty is not just economic but defined by way of health and education.” – (Azim Premji)
• “Inflation is repudiation.” – (Calvin Coolidge)
• “The safe way to double your money is to fold it over once and put it in your pocket.” – (Frank Hubbard)
• “Inflation is the senility of democracies.” – (Sylvia Townsend Warner)
• “Inflation is the parent of unemployment and the unseen robber of those who have saved.” – (Margret Thatcher)
• “Nothing so weakens a government as inflation.” – (John Kenneth Galbraith)
• “Inflation is like toothpaste. Once it’s out, you can hardly get it back in again.” – (Karl Otto Pohl)
• “If you buy things you don’t need, soon you will have to sell things you need.” – (Warren Buffet)
• “This would, at a stroke, reduce the rise in prices, increase production and reduce unemployment.” – (Edward Heath)
• “Production is the only answer to inflation.” – (Anonymous)
• “Money is power, freedom, a cushion, the root of all evil, the sum of blessings.” – (Carl Sandburg)
• “The lesson is clear. Inflation devalues us all.” – (Margaret Thatcher)
• “Inflation makes the wealthiest people richer and the masses poorer.” – (James Cook)

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English for Economists

Inflation | english lesson.

Apr 13, 2022

Hello and welcome. My name is Alan Robert, and today is April 12th, 2022.   Our English vocabulary selection today has to do with inflation. We’ve touched upon inflation in recent previous podcasts when we have looked at the tendency of central banks to raise their policy rates , and the high prices of soft commodities like wheat and canola, due to war in Ukraine and drought in Canada , as well as problems in the global supply chain . If you missed those lessons, I encourage you to go back and listen to them.

Since inflation is shaping up to be one of the big stories of this year as many large and small economies are already feeling the effects of surging prices, I thought we could take a deeper look at some of the technical vocabulary you might need in order to discuss the issue yourself.

Okay. Let’s get started with the vocabulary. Knowing how to use at least a few of these words will help you talk about inflation in English.

• CPI: These initials stand for the Consumer Price Index, which is a measure of the average change over time in the prices paid by consumers for a market basket of goods and services.
• Hawk: An inflation hawk is someone seen as willing to allow interest rates to rise in order to keep inflation under control.
• Inventory: Inventory can refer to raw materials used in a manufacturing process, or it can mean the accumulation of finished goods… also known as stock.
• Creeping inflation: This is mild inflation, usually understood to be less than 3% per year. Creeping means that it is increasing, but slowly.
• Walking inflation: Inflation between 3% and 10% per year. This level of inflation is considered harmful.
• Galloping inflation: a condition when the inflation rate is extraordinarily high. It is perhaps 20%, 50%, or even higher on an annual basis.
• Hyperinflation: This is when inflation gets out of control. You might see monthly increases of more than 50%.
• Demand-pull Inflation: Demand-pull inflation is the upward pressure on prices that follows a shortage in supply, a condition that economists describe as “too many dollars chasing too few goods.”
• Cost-push Inflation: Cost-push inflation (also known as wage-push inflation) occurs when overall prices increase due to increases in the cost of wages and raw materials.
• Built-in Inflation: Built-in inflation occurs when workers demand higher wages to keep up with rising living costs. This causes businesses to raise their prices in order to offset their rising wage costs, leading to a loop of wage and price increases.  Built-in inflation is sometimes referred to as a “wage-price spiral”.
• Pent-up demand: A rapid increase in demand for a service or product after a period of reduced spending which resulted in a backlog of demand.

Okay, listen up. You will hear some, but not all of the vocabulary, used in this short summary:

It’s not quite a global phenomenon, since some countries – particularly in Asia — are only experiencing creeping inflation this year, but other major economies, like the United States, have entered the harmful range of walking inflation, with inflationary figures higher than they have been in the past 40 years.

This historical spike in inflation has been driven by supply chain disruptions and pent-up consumer demand for goods following the reopening of the economy in 2021.  This situation has been complicated by the Russian invasion of Ukraine, which led to a surge in the price of oil and wheat.

Consumers can feel the spike in oil prices at the gas pump, and they feel the soaring wheat prices at the grocery store.

Complicating matters even more, countries are also experiencing cost-push inflation caused by the current high prices of many raw materials, like copper for example.

Most analysts expect central banks to apply hawkish policy measures, which will feature increases in policy rates designed to make credit more expensive and hopefully bring inflation down to its normal range.

Thank you for joining me on today’s lesson. If you’d like to connect with me, feel free to shoot me a message here . Until next time!

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Bsc ba adp english essay inflation / rising prices with outline & quotations, bsc ba adp fsc ics fa icom english essay inflation / rising prices  with outline & quotations essay notes online taleem ilmi hub.

To view Quotations for Essays. Click  Here .

1. Introduction

• Different definitions of inflation
• It has become the problem of every country

2. Causes of inflation

• Natural calamities
• War is also a curse of inflation

3. Some other curses of Rising Prices

• Devalue of currency
• International circumstances

4. How to control the rise in prices

• Export should be increased and import should be decreased
• Some other policies should be planned

5. Conclusion

In economics, inflation is described as a specific situation whereby the demand for goods and service exceeds to the available supply. Inflation can also be defined as " an abnormal increase in the quantity of purchasing power ".

In every country there is a specific demand and supply within the country. There is a particular price fixed but sometime supply increases and demand decreases and certain time demand increases and supply decreases. In ordinary language, inflation means a general rise in prices. Inflation is the problem of whole of the world. It is a burning question now-a-days, and every country of the world is trying to control it.

There are many causes of inflation which can be discussed. Natural calamities are the main cause of inflation. If the products of a country are cheapened by floods or famine etc. its ultimate result is inflation and the prices will be increased. War is another important cause of inflation. The war always creates inflation in the economy of a country. Pakistan made progress by leaps and bounds before Indo-Pakistan war 1965. But after the war, the economy of Pakistan was badly affected and Indo-Pakistan war 1971 brought the worst set-back to the people of Pakistan. Government of Pakistan found no other way except to devalue its currency to rebuild the economy. International circumstances also affect the economy of a country. If the prices of some major items like petrol, oil or machines are increased, a country which imports these things will be compelled to increase the prices.

Now the question is how to control high prices. The answer is very easy but economists suggest different steps. Firstly, exports should be increased and imports should be decreased. 

Secondly, the government should decrease the expenditures. Thirdly, the government should withdraw all subsidies. Fourthly, circulation of currency should be controlled. Fifthly, free foreign exchange policy should be controlled.

After taking all above mentioned steps, highly increasing prices can be controlled in the long run. The government should avoid further devaluation in currency.

"Inflation is a disease, a dangerous and sometimes fatal disease, a disease that it not checked in time, can destroy a society". (Milton Friedma)

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Inflation essay for 2nd year with quotations

Inflation essay for 2nd year with quotations 

As we all know that the students of 2nd year begin their search for essays related to current affairs. inflation essay has always been one of the important essays. if we take a look at the current affairs of pakistan we shall surely find inflation as one of the hot topics. this is the reason the essay on the topic " inflation" has gained so much importance. this is why , we are going to share this essay on the topic " inflation "for the easiness of the students inflation is not only the problem of pakistan rather it has become a global issue as the people from all over the world are found complaining about the rising prices etc. along with numerous other issues it has become one of the major issues for the people living in developing countries. the students will feel comfortable to find this essay on the topic inflation. the essay inflation has been written by our well experienced team . the lecturers who have prepared this essay are very hardworking. this is why the students should feel comfortable while this essay shared by us., the importance of inflation essay, as we have mentioned above that the essay is very important so , the importance of this essay is clear from this. current affairs have been playing very important role. while choosing important topics for essay writing questions , the checkers always choose two essays from current affairs., how to download inflation essay, important moral stories important applications chemistry full book notes guess papers for all classes 1st year all notes 2nd year all subjects notes all classes practice test online english important paragraphs physics important questions notes biology important questions notes, post a comment, contact form.