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Impact of Inflation on Investments
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This unit is in continuance with the previous, which will help you to understand the impacts of inflation on various topic. As the lesson starts the educator explains about impacts of inflation on investments. The uncertainties which will occur on investments due to inflation have been detailed and the problems like the generation of black money, balance of payments and much more, which may arise due to it are also mentioned.

Ayussh Sanghi is teaching live on Unacademy Plus

Ayussh Sanghi
Passionate Educator - CSE / Other Govt Exams [Peep into my Unacademy Plus Courses & experience awesome learning.]

U
Unacademy user
D
sir, in the last impact in which u explained how inflation effects fiscal deficit. U said that gov borrows less and spends from public exchequer. then how is expenditure increasing. It is just the source that is being effected.
D
Dimpy
a year ago
I am not able to understand this point. sir please explain.
sir plz correct if i m wrong. Inflation will devslue our currency snd hence export will be cheaper which will increase exports not decrease as u told.
D
Dimpy
a year ago
exports will decrease . it is the price of goods that is increasing due to which price of export goods are also increasing. Thus, this makes our goods expensive in the foreign market and make it less competitive due to which exports may fall. I hope it helps.
Thanks a lot, lesson are very interactive and gives clarity on topic. Thank u once again.
  1. Inflation BY AYUSSH SANGHI Impact of Inflation Part 4.7


  2. ABOUT ME >Passionate about Teaching >Taught at most reputed Civil Services Institutes >CA, Lawyer Follow me on: https://unacademy.in/user/ AyusshSanghi


  3. Impact of Inflation on Investments In case of unexpected inflation occuring on a regular basis, the degree of risk associated with investments in the economy increases. The increased risk factor creates uncertainty in the minds of investors and they become reluctant to invest in long - term capital nstruments. . As a result the level of investment falls and the prospects for long term economic growth is lessened.


  4. Impact of Inflation on Investments . Rise in price level would eventually erode the volume of investments in real terms in India. Inflation also leads to rise in interest rates as interest rates move in tandem to keep abreast of inflation to put a curb on rise in demand for loans from banks. to keep abreast of intatest rates as interest rates . As we know, as the interest rate rises, investments fall.


  5. Impact of Inflation on Black Money Inflation is p Inflation is perceived as a problem. .Hence it breeds: corruption, black-marketing and speculation and is responsible for generation of black money


  6. Impact of Inflation on Balance of Payments Inflation makes exports costlier. Due to the same it may impact: balance of payments and . exchange rate adversely.


  7. Impact of Inflation on Fiscal Deficit on on Fiscal Deficit Rise in interest rates due to inflation can also make borrowing by the government costly and thereby raise fiscal deficit.