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90- Inflation and its causes | Deflation and Its Causes | Disinflation | Inflation Rate | CPI & WPI - YouTube
Channel: Easy Learning Economics
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hello friends welcome to easy learning
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economics this is dr carol
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today we are going to learn about
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inflation and its causes in this lecture
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we shall discuss that what is deflation
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and its causes what is disinflation
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what is the inflation rate what is the
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consumer price in the cpi and wpi the
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wholesale price index so in this lecture
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we shall discuss the inflation and all
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the relevant concepts so what is
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inflation
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inflation
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means a persistent rise in the general
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level of price when
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the general price level rises the
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purchasing power decreases and our
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currency buys fewer goods aim services
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and the cost of living in the country
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increases like price of many consumer
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goods have been doubled in two decades
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increase in the price level leads
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producer towards the high profit and the
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producer produce more and unemployment
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decreases what are the causes behind
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inflation inflation can occur due to
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increase in the cost of production like
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rise in the price of raw material
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wages are increase in interest rate
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inflation can be due to increase in the
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demand for a product what is deflation
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deflation means a sustained decrease in
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the average price level
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is observed in the great depression in
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the usa in 1929
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when stock market crashed purchasing
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power increases due to deflation
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and our currency buys more goods and
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services and cost of living in the
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country decreases the lower prices bring
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lower profit to producer
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and producer produce
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less and lay of the workers as a result
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unemployment increases
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what are the causes behind the deflation
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deflation can occur
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due to decrease in money supply
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or increase in productivity and increase
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in technological progress what is
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disinflation
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this inflation is a rate of decrease in
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the general level of price or
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disinflation is a decrease in the
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increase rate of inflation and price
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level slows down from the previous
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period it means the price inflation
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slows down temporarily and inflation
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rate declines over time but remains
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positive example
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if the annual inflation rate for the
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month of january is six percent
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and it is five percent in the month of
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february
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and four percent in the month of march
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the price is
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disinflated by one person but are still
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increasing at five percent and four
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percent annual rate and it means
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inflation occurs but the speed of
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inflation decreases what is inflation
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rate a number showing variation in the
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price level compared with the price
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value in the previous period often
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represented by 100
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and called the changes in the index
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number can be expressed as percent
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changes either monthly or annually
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called the inflation rate for example if
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the price
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of certain commodity rises from 10
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dollar in the year
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2007-15 dollar in the year 2017
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the price index number will be 150
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showing that there is a 50 increase in
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the prices over this period so inflation
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rate
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means the percentage change in consumer
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price index over the reference period
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here is a formula for calculating the
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inflation rate the formula for inflation
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rate is cpi 2 minus cpi 1 divided by cpi
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1 multiplied by 100
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here you can see
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that cpi 2 means price in the current
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year the cpi 1 means the price in the
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base year current year price minus base
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year price divided by base year price
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multiplied by 100 calculate the
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inflation rate in the example data in
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the formula we calculate inflation rate
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this is the
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cpi 2 this is the cpi 1
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so 15 minus 10 divided by chain that is
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cpi 1 multiplied by 100 and after
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solving it that the inflation rate that
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has been calculated is
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50 percent
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it means
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there is a 50 increase in prices over
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this period what is cpi cpi stands for
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the consumer price index it is also
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known as retail price index
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cpi is a mayor of the cost of fixed
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market basket of consumer goods and
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services purchased by the household what
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is fixed market basket of consumer goods
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the fixed set of consumer products
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including goods and services whose price
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is monitored regularly monthly or
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annually a large rise in cpi during
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short period of time denotes the
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inflation period
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and large drop in cpi during short
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period of time marks the period of
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deflation inflation
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reduces the confidence over the long run
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in the value of dollar changes in cpi
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are used to observe the changes in price
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level associated with cost of living the
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cpi is released on monthly basis from
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central statist office ministry of
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statics and program implementation
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cpi includes 460 items of eight
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categories of product
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what are those items transportation
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beverages
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apparel
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education communication recreation food
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housing and medical care
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the calendar year is used as base year
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in cpi and it is important to general
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public it means
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the cpi provides information
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about price changes donation
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government
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business labor and private citizens
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and cpi is the indicator of
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effectiveness of the government economic
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policies cpi the consumer price index
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the my year of inflation is widely used
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by
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157 countries including pakistan the
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other mayor of inflation is wpi means
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the wholesale price index consumer price
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index and wholesale price index are used
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to measure the changes in price of goods
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and services the wholesale price index
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measures the changes in price of
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697 primary goods
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like fuel
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power and manufacturing goods only
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charged by the wholesaler
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pulsing price index wpi is released and
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published on weekly basis from the
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office of the economic advisor ministry
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of commerce and industry
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financial year is used
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as a base year to measure the inflation
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in the first stage wpi it means the
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wholesale price index is used by few
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countries like india
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in this lecture we learned that what is
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inflation if we summarize we can say
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that inflation means the persistent rise
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in general level of price is deflation
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deflation means the persistent decrease
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in general level of price
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what is disinflation disinflation means
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decrease in the annual rate of increase
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in inflation is called disinflation so
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what is cpi cpi means the consumer price
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index that is also known as retail price
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index that is shows the changes in price
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level with reference to a base year
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and what is the wholesale price index
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wholesale price index is used to measure
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the changes in price of goods and
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services so it is all about the
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inflation i hope that you understand
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more about inflation and various concept
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if you have any queries or suggestions
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let me know in comment box thanks for
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watching
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