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Effects of Inflation (in Hindi)
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Inflation Part- E

Aartee Mishra is teaching live on Unacademy Plus

Aartee Mishra
Delhi University Topper YouTube Channel - Happiest Human Successfully Taught 20 GS Batches Made Free Courses on All Standard Books of UPSC.

Unacademy user
thank u sir must needed course
how inflation leads to more supply of money, i am confused
Avinash Kumar
2 days ago
when supply of money increases people get money and purchase products but supply remains same and demand increases due to this inflation increase and production need to increase which give the boost to economy this inflation can be done by govt deliberetly called reflation
  1. aily Lecture Series Ramesh Singh's) A brief Summary of Indian Economv Inflation and Business Cycle-D indi unacadeny By Aartee Mishra


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  4. EFFECTS OF INFLATION There are multi-dimensional effects of inflation on an economy both at the micro and macro levels. It redistributes income, distorts relative prices, destabilises employment, tax, saving and investment policies, and finally it may bring in recession and depression in an economy. A brief and objective overview of the effects of inflation is given below: On Creditors and Debtors Inflation redistributes wealth from creditors to debtors, i.e., lenders suffer and borrowers benefit out of inflation. The opposite effect takes place when inflation falls (i.e., deflation) > On lending With the rise in inflation, lending institutions feel the pressure of higher lending. Institutions don't revise the nominal rate of interest as the 'real cost of borrowing, (i.e., nominal rate of interest minus inflation) falls by the same percentage with which inflation rises.


  5. EFFECTS OF INFLATION On Aggregate Demand Rising inflation indicates rising aggregate demand and indicates comparatively lower supply and higher purchasing capacity among the consumers. Usually, higher inflation suggests the producers to increase their production level as it is generally considered as an indication of higher demand in the economy On Investment Investment in the economy is boosted by the inflation (in the short-run) because of two reasons: (i) Higher inflation indicates higher demand and suggests enterpreneurs to expand their production level (ii) Higher the inflation, lower the cost of loan


  6. EFFECTS OF INFLATION On Saving Holding money does not remain an intelligent economic decision (because money loses value with every increase in inflation) that is why people visit banks more frequently and try to hold least money with themselves and put maximum with the banks in their saving accounts. This is also known as the shoe leather cost38 of inflation (as it consumes the precious time of the people visiting the bank frequently tagging their shoe). On Expenditure Inflation affects both the forms of expenditures consumption as well as investment. Increased prices make our consumption levels fall as goods and services we buy get costlier. We see a tendency among the people to cut their consumption levels aimed at neutralisin fall. Exact opposite happens once prices head downward g the impact of price rise- making consumption expenditure


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