Question: Inflation in India:History,Causes and Solutions

Answer: The history of inflation in India: India is initially high and low inflation. Except for 1956, the inflation rate of the Republic of India was originally less than 10%. Watch the complete answer with ...

Historically, large amounts of economic literature have focused on the causes of inflation and its impact. There are various ways of thinking about the cause of inflation. The majority of them are divided into two major fields. Inflation quality theory and quantitative theory of inflation. The quality inflation theory depends on the seller's expectation of accepting currency, so you can exchange it later as a product of the buyer. Quantitative inflation theory depends on the equation of money quantity related to money supply, the speed of currency distribution and the nominal value of exchange. Adam Smith and David Hume proposed quantitative theory of money inflation and quality theory of production inflation.

According to studies that have been done so far, the cause of inflation varies, which leads to the complex thinking of economic experts who believe that inflation is caused by quality or quantity theory (macroeconomics, item 1) . Quality theory is that the goods seller hides the goods only when the demand is high and the quantity depends on the country's money supply in circulation or distribution. One of the main reasons for inflation is government activity; this is when the government uses extra money to respond to specific crises. An increase in domestic excess supply of money lowers the value of money, and commodity prices rise from this decline, leading to inflation (Mishkin, p. 68).