In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. . Positive effects include ensuring that central banks can adjust real interest rates (to mitigate recessions), and encouraging investment in non-monetary capital projects.Effects inflation An increase in the general level of prices implies a decrease in the purchasing power of the currency. That is, when the general level of prices rise, 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 Controlling inflation If economic growth matches the growth of the money supply, inflation should not occur when all else is equal. A large variety of factors can affect the rate of both.Today the primary tool for controlling inflation is monetary policy. Most central banks are tasked with keeping their inter-bank lending rates at low levels, normally to a target rate around 2% to 3% per annum, and within a targeted low inflation range, somewhere from about 2% to 6% per annum.Under a fixed exchange rate currency regime, a country’s currency is tied in value to another single currency or to a basket of other currencies (or sometimes to another measure of value, such as gold). A fixed exchange rate is usually used to stabilize the value of a currency, vis-a-vis the currency it is pegged to. It can also be used as a means to control inflationThe gold standard is a monetary system in which a region’s common media of exchange are paper notes that are normally freely convertible into pre-set, fixed quantities of gold.Another method attempted in the past have been wage and price controls (“incomes policies”).
Wage and price controls have been successful in wartime environments in combination with rationing.The real purchasing-power of fixed payments is eroded by inflation unless they are inflation-adjusted to keep their real values constant. In many countries, employment contracts, pension benefits, and government entitlements (such as social security) are tied to a cost-of-living index, typically to the consumer price index. A cost-of-living allowance (COLA) adjusts salaries based on changes in a cost-of-living index. Causes inflationHistorically, a great deal of economic literature was concerned with the question of what causes inflation and what effect it has. There were different schools of thought as to the causes of inflation. Most can be divided into two broad areas: quality theories of inflation and quantity theories of inflation.
The quality theory of inflation rests on the expectation of a seller accepting currency to be able to exchange that currency at a later time for goods that are desirable as a buyer. The quantity theory of inflation rests on the quantity equation of money that relates the money supply, its velocity, and the nominal value of exchanges. Adam Smith and David Hume proposed a quantity theory of inflation for money, and a quality theory of inflation for production. A visit to a hill station A Visit to hill a Station’ is an exciting experience. It gives a chance to live in the lap of Nature. In direct touch of Nature we can feel a divine peace and calmness in mind. It makes us feel to be lucky among millions who are over busy in world by affairs.India is a hot country. It is terribly hot during the months of May and June. The northern plains of India are very hot in these months. Hence a trip to some hill station is always tempting. Everybody likes to go somewhere in the lap of Nature to keep himself/herself away from the intense heat of the plains. But those who have money only they go to hills to enjoy their time whole heartedly.
The hills not only give relief from heat but are also useful for health. God seems to smile through the beautiful and lovely scenes of Nature.In Northern India there are many hill stations like Nainital, Shimla and Mussourie etc. I had a great desire to visit Shimla. So, I with my friends, made a programme to spend summer at Shimla. We reached Shimla in the morning. We went there in the month of June by bus.We made arrangements for our stay in a private house. It was on the top of the hill. The surroundings of that house were very charming. We could see the beauty of Nature and hills; we could also see the lower portion of Shimla from there. We arranged a servant there. He swept the house and prepared tea for us. We had everything for cooking with us.We stayed at Shimla for ten days. We took a guide. After taking breakfast, we used to set out on sight-seeing. We came back at 2 p.m. and took lunch. The servant was a good cook.
The pure air and greenery of the hills made us fresh. We had heard that rainy days of Shimla are more enjoyable. Hence we took pleasure of showers when it rained one day or two.It made us feel sensations of deeper joy. We enjoyed getting drenched. We came back, changed our clothes and took coffee. Shimla attracts a number of tourists due to its natural beauty. The Mall Road of Shimla and Jhaku hills are always full of throngs during summer season. Mall Road is also found full of activity in the evenings. With unforgettable memory we came back to Delhi.
The visit is still fresh in my mind. It has been a memorable visit, because it was a pleasure trip for me.Our return journey by bus was accompanied by our old and new experience of this visit. It was no less thrilling. We were charmed by the night beauty of the city. Shimla city’s houses were twinkling like stars in the sky. The enchanting music of tall trees and far-stretching hills were inviting us to visit this place again and again. The whirling zig-zag road gave us a chance to see the nature with different angles to feel it in full length. Shimla is indeed a queen of hill stations. I would like to visit it once again.