Economy, inflation, price, Malaysia, cost push inflation, types of inflation, factors of inflation, effects of inflation, price index, Malaysia, CPI consumer price index
In the economy, inflation means an increase in the general price of goods and services in an economy from time to time. G. Ackley defined inflation as a persistent and appreciable rise in the general level or average of prices'. With the increase in general price levels, each unit of currency can only buy goods and services in lesser quantities than ever before. Therefore, inflation also reflects the decline in purchasing power, which is a loss of real value in internal exchange medium of an economy. High inflation may lead to a shortage of goods when consumers begin hide items because worries about prices will rise in the future.
[...] H. (2009). Inter-relationship between Economic Growth, Saving and Inflation in Asia. Journal of International Economic Studies, the Institute of Comparative Economic Studies, Hosei University, No.23, 1–22. Aurangzeb. (2012). Factors Affecting the Trade Balance in Pakistan. Economy and Finance Review Vol. 1(11) pp.25–30. Vera, L. (2010). Conflict Inflation: an open economy approach. Journal of Economic Studies, Vol Issue 597-615. [...]
[...] Since they have less money to lend, they increase the interest rate. With the higher interest rate, fewer people and institutions borrow money or borrow less money. Additionally because of the higher interest rates more people and institutions deposit money in banks to profit off of higher interest. In the short term, this means that businesses and people are spending less of their money which slows down growth. If there is not a lot of spending then prices do not rise as much. [...]
[...] Malaysia exhibits an exceptional feature in inflationary experiences the economy had experienced high (1973‐1974, 1980‐1981) and low (1985‐1987) regimes of inflation, and could contain a low and stable inflation during the high economic growth period of 1988‐1996. The achievement of this relatively low inflation during the high economic growth regime was attributed to the effective and consistent policy mix adopted by the Malaysian government. The “zero inflation campaign” that was launched on 2 June 1995 marked the government's strong intention to curb inflation in the country. References Cheng M., Tan H. (2002). Inflation in Malaysia. [...]
[...] 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. Diagram 2 Source http://www.economicsdiscussion.net Diagram 2 above shows the creeping, walking, and galloping inflation. A. Creeping Inflation Creeping or mild inflation is when prices rise 3 percent a year or less. [...]
[...] BNM will impose an action to lower the inflation rate and restore the price stability which by increasing the OPR. BNM will increase the target OPR and sells securities and decrease the supply of the reserves of the banking system, the banks reduce deposits by decreasing loans and reduce the supply of money. The short-term interest rate increase and reduce the quantity of money demanded. Then, banks decrease the supply of loans decreases the supply of loanable funds and the supply curve shift to the left. [...]
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