INFLATION VS DEFLATION AND METHODS OF CONTROLLING INFLATION

Basic concept of inflation

WHAT IS INFLATION AND METHOD OF CONTROLLING INFLATION ?

InflatIon is defined as a sustained increase in the general label of price for goods and services.it is measured as an annual percentage increase. as infection rises, every rupee you own buys a smaller percentage of goods or service,

The value of rupee does not stay constant when there is inflation. the value of rupee is observed in terms of purchasing power. which is the real.tangible goods that money can buy when inflation goes up there is decline in the purchasing power of money,

Economist generally agreed that high rate of inflation and hyperinflation are caused by an excessive growth of money supply. views on which factor determine low to moderate rate of inflation are more varied. law or moderate infection may be attributed to fluctuations in real demand for goods and services. or changes in available supplies such as during scarcities, as well as to growth in the money supply. However the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.                                               EFFECT OF INFLATION

An increase in the the general level of prices implies a decrease in the purchasing power of the currency. That is when the general level of prices rises, each monetary unit buys fewer goods and services. The effect of inflation is not distributed evenly in the economy, and as a consequence there are hidden costs to some and benefits to others from this decrease in the purchasing power of money,

If the InflatIon rate is greater than that of other countries. Domestic product become less competitive.

The value of investment are destroyed over time.

Non-uniform Inflation's can lead to heavy competition in the global market and threaten the existence of small economics.

Monetary policy 

METHODS OF CONTROLLING INFLATION

*Monetary policy

*Fixed exchange rate

*Gold standard

*Wage and price control

Monetary policy

Today the primary tool for controlling inflation is monetary policy. Most Central banks are tasked with keeping the federal funds lending rate at low level

Fixed exchange rate

A fixed exchange rate is usually used to stabilise the value of a currency. it can also be used as a means to control inflation.

Gold standard

Under a gold standard methods the long term rate of inflation ( or deflation) would be determined by the growth rate of supply of gold relative to total output.

Wage and price control

An other method attempted in the past has been wage and price control .in general wage and price control are regards as a temporary and exceptional measure ,only effective when coupled with policies designed to reduce the underlying causes of inflation during the wage and price control regime,for example, winning the war being fought.

Deflation in economic term

WHAT IS DEFLATION?

A general decline in price often caused by a reduction in the supply of money or credit. Deflation can be caused  also by a decrease in government personal or investment spending . The opposite of Inflation, deflation has the side effects of increase unemployment since there is a lower level of demand in the economy which can lead to an economic depression.central bank attempt to stop severe deflation along with severe inflation in an attempt to keep the excessive drop in prices to a minimum.

EFFECTS OF DEFLATION

*Decreasing nominal prices for goods and services

*Increasing real value of cash money and monetary item

*Discourages bank saving and decrease investment

*Benefits fixed income earners

*Recession and unemployment

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DEMOCRACY VS REPUBLIC AND IMPORTANCE OF ELECTION

Democracy and Republic

DEMOCRACY VS REPUBLIC AND IMPORTANCE OF ELECTION

The word 'democracy' is derived from the Greek language and means 'rule of the people'. In a democracy all citizens are free and have equal rights and duties. The fundamental idea of this form of government comes from ancient Greece. At that time leaders directly addressed the crowd and the decisions about the laws were made in the assemblies. In today's republics, the procedure is more elaborate and structured. Elections are held every five years in which the citizens of the country elect their representatives, who sit in the parliament and pass laws.

REPUBLIC

Democracy and republic are not same, The word republic actually 'res publica' is derived from the Latin and can be loosely translated to public affairs, In general this means a form of government which is neither a monarchy nor a dictatorship. Many countries have the word Republic in their names, but are often not a republic. For examples the federal republic of Germany and the French republic are both democracies.

The republic of Belarus on the other hand is a dictatorship.

PEOPLE'S REPRESENTATIVE ELECTION PROCESS

The people's representative are elected every five years. Citizens go to polling booth to cast their votes. The voting regulation, procedure and forms may  very widely form country to country. Provisions are made at the polling booths for the voters to record their preferences in secret. Voting can be done through ballot papers or through electronic voting machines. People elect a representative from their constituencies and send him/ her to the parliament to represent them. Usually representative belongs to a political party, which is a group of people with similar political views.

IMPORTANCE OF ELECTION

Voting in election is a civic duty of every citizen in a democratic country before elections candidates introduce themselves in the media and advertise their policies. Citizens elect those whose elections program they agree with the most . Some people do not know whom to elect but are usually sure of whom not to elect. Therefore people should always go and vote to prevent a party with unacceptable ideology from getting elected.

Parliament

DUTIES OF PARLIAMENT

In the parliament the members discuss and vote for or against the laws. The members of parliament must act only according to their conscience. The parliament also has the task of controlling the government and the group of ministers. If the parliament is of the opinion that the government is not fulfilling its tasks or violating the laws a board of enquiry meets and checks the matter in detail.

PROCESS OF NEW LAWS MADE IN A COUNTRY

Laws making

A law in a democratic contrary is passed by the parliament if the majority of the member of parliament vote for it. before this there is a draft bill which is introduced for discussion in the lower house of the parliament and  can be revised several times. After that approval is required from the upper house of the parliament. if the Bill passed by one house is amended by the other house it goes back to the originating house for further discussion. when a bill is passed by both houses it is sent for consent to the head of the constitution. The bill becomes an Act from the date of his/her assent.

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