The Average Inflation Rate Of Bangladesh Economics Essay

In 1990 the rising prices rate was highest rate 10.522 which average 20.47 % after that from 1991 to 1993 the rate was traveling down easy like ( -21.26, -56.26, -17.80 ) In 1995 the rate was traveling small high like but that rate was non recover before rates. In 1996 the rate was once more consecutive traveling down. From the 1997 to 1998 the rate was traveling up. After 1999 to 2001 the rate was once more traveling down, and than the rate was traveling up on 2007. And the last 2 old ages ( 2008-2009 ) the rising prices rate of Bangladesh was traveling down.

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Undertaking 02:

A ) Inflation:

Inflation is a rise in the general degree of monetary values of goods and services in an economic system over a period of clip. When the monetary value degree rises, each unit of currency bargains fewer goods and services ; accordingly, rising prices is besides eroding in the buying power of money ‘ a loss of existent value in the internal medium of exchange and unit of history in the economic system. A main step of monetary value rising prices is the rising prices rate, the annualized per centum alteration in a general monetary value index ( usually the Consumer Price Index ) over clip.

B ) Explanation:

This country of economic science has likely given rise to one of the most important macroeconomic arguments in recent history. There are basically two causes of rising prices.

‘ Cause of Demand Pull Inflation

‘ Cause of Cost Push Inflation

Cause of Demand Pull Inflation

Demand is influenced about wholly by the sum of money in the economic system, viz. the money supply. They argue that rising prices is caused by the sum of money in the economic system and therefore the disbursement power of the population transcending the capacity of the state to bring forth goods and services. Increased money supply will take to additions in disbursement through transmittal mechanisms and this will constantly make a state of affairs where aggregative demand for goods and services exceeds the aggregative supply ensuing in demand pull rising prices. This is shown by the displacement of the short-term aggregative demand curve in the diagram below.

Cause of Cost Push Inflation

When houses ‘ costs increase they will raise their monetary values in order to keep the existent value of their net incomes. This will ensue in the existent incomes of the proprietors of the factors of production e.g. rewards, falling. In an effort to keep their existent income labor will demand higher money rewards and this will in bend rise costs. This is frequently referred to as cost push rising prices and may be caused by:

‘ Additions in factor monetary values e.g. oil monetary value addition.

‘ An addition in pay colonies in surplus of any addition in productiveness.

‘ A devaluation or depreciation of currency taking to an addition in import monetary values.

‘ Interest rate additions will increase the cost of adoption.

‘ Indirect revenue enhancement or the remotion of subsidies.

As in the diagram below.

The Keynesian Argument

They argue that maintaining a tight control over money supply so as to command disbursement is extremely questionable. They argue that increases in money supply will take to additions in disbursement and providing there are unemployed resources houses will increase end product in response.

Finally they argue that establishing economic jobs, how do you really go about commanding the sum of money. In a universe where at that place many ways in which

people can borrow money, can pecuniary policy successfully command the sum available for disbursement?

The Monetarist View of Inflation

Monetarists put frontward two possible accounts of rising prices. First they recognise that increases in aggregative demand may take to demand pull rising prices. Additions in disbursement in surplus of the full employment degree of end product will make deficits ( overheating ) and houses will raise their monetary values. This can be shown by a displacement of the aggregative demand curve to the right.

Undertaking 03:

A ) Under the bed, Not a safe topographic point for your nest eggs

My money at place is a high hazard scheme, as most family insurance policies will merely cover a limited sum of hard currency.

The entire value of Bank of England bills in circulation continues to lift, but their usage in minutess is falling bit by bit.

Most of all, moreover, maintaining your nest eggs in hard currency will besides intend that you are easy losing money. Keeping physical hard currency gives no protection against rising prices, which official consumer monetary values index figures put at 1.5 % . This means that in order to keep the buying power of your difficult earned money it needs to be pulling an involvement rate of at least rising prices, sooner plus whatever revenue enhancement you pay.

B ) This was a predictable Budget which did nil to simplify the revenue enhancement government so concerns are in for another heavy Finance Bill.

May be it can increase the rate of involvement.

Every month it should be multi more instead than chief money.

C ) It was tough to pay the leant money.

If you lent money through Prosper back so, when most of its loans were extended, there ‘s a really high opportunity that you ‘ve lost money ‘ in some instances, a batch of money. ‘Of investors with a portfolio of loans that are an norm of at least two old ages old, ‘ notes Gimein, ‘folks who have lost money outnumber those who ‘ve earned 6 percent one-year return by more than six to one. ‘

One of the large jobs that Prosper ran into ‘ the monolithic recognition crunch and the resulting Great Recession ‘ could moderately be considered to be a one-off event with a low likeliness of go oning once more. But another is endemic to the theoretical account: Prosper borrowers with a given FICO mark are necessarily traveling to be more likely to default on their debts than most other people with the same recognition mark.

It was n’t meant to be that manner. Peer-to-peer loaning was meant to make a personal connexion between borrower and loaner, and hence do borrowers more likely to refund their debts than people faced with big duties to hated, faceless Bankss. But it seems that inauspicious choice effects overwhelmed the site ‘s efforts to be warm and fuzzed.

Undertaking 04:

A ) Inflation is a sustained rise in the mean monetary values of goods within an economic system ; it can besides be seen as a alteration in the buying power of money. Inflation can usually be divided into two types ‘ cost-push and demand-pull. Cost-push happens when monetary values are pulled up by lifting costs, demand-pull happens when demand outstrips supply and monetary values will hence hold to lift to suit this. Monetarists argue that rising prices is caused additions in the money supply, the entire sum of money circulating in the economic system at one clip. This is as the believe that any addition in the money supply which is non in line with the growing in end product of the economic system will take to rising prices. If the money supply was increased in the short-term so consumer disbursement.

When you introduce money into circulation out of nowhere, it lessens the value of everyone ‘s money. It is in everybody ‘s best involvement, so, to maintain rising prices low.

In Germany after WW1, they purposefully hyper-inflated their money. Peoples were conveying money into shops in garden carts merely to purchase day-to-day food markets. They used money to fuel the fire and even used it as lavatory paper, because it was virtually worthless.

We want to undertake rising prices because we do n’t desire that to go on.

B )

Cost Push Inflation

Cost-push rising prices occurs when concerns respond to lifting production costs, by raising monetary values in order to keep their net income borders. There are many grounds why costs might lift:

Rising imported natural stuffs costs possibly caused by rising prices in states that are to a great extent dependent on exports of these trade goods or instead by a autumn in the value of the lb in the foreign exchange markets which increases the UK monetary value of imported inputs.

Higher indirect revenue enhancements imposed by the authorities ‘ for illustration a rise in the rate of excise responsibility on intoxicant and coffin nails, an addition in fuel responsibilities or possibly a rise in the standard rate of Value Added Tax or an extension to the scope of merchandises to which VAT is applied.

Demand Pull Inflation

‘ A decrease in direct or indirect revenue enhancement. If direct revenue enhancements are reduced consumers have more existent disposable income doing demand to lift. A decrease in indirect revenue enhancements will intend that a given sum of income will now purchase a greater existent volume of goods and services.

‘ Rising consumer assurance and an addition in the rate of growing of house monetary values ‘ both of which would take to an addition in entire family demand for goods and services

‘ Faster economic growing in other states ‘ supplying a encouragement to UK exports overseas.

In the first diagram the SRAS curve is drawn as non-linear. In the 2nd, the macroeconomic equilibrium following an outward displacement of AD takes the economic system beyond the equilibrium at possible GDP. This causes an inflationary spread to look which so triggers higher pay and other factor costs. The consequence of this is to do an inward displacement of SRAS taking existent national end product back towards a macroeconomic equilibrium at Yfc but with the general monetary value degree higher than it was earlier.

Undertaking 05:

A ) Supply-Side Economicss:

The term ‘supply-side economic sciences ‘ is used in two different but related ways. Some use the term to mention to the fact that production ( supply ) underlies ingestion and life criterions. In the long tally, our income degrees reflect our ability to bring forth goods and services that people value. Higher income degrees and life criterions can non be achieved without enlargement in end product. Virtually all economic experts accept this proposition and therefore are ‘supply siders. ‘

‘Supply-side economic sciences ‘ is besides used to depict how alterations in fringy revenue enhancement rates influence economic activity. Supply-side economic experts believe that high fringy revenue enhancement rates strongly deter income, end product, and the EFFICIENCY of resource usage.

B ) Supply-Side Factors

Bangladesh ‘s Factors:

? Rising universe nutrient monetary values

The economic system of Bangladesh is dependent on imports for most of the indispensable nutrient points. Any addition in international monetary values is, hence, expected to be passed on to domestic monetary values through the import channel. We notice a secular addition in the monetary values of four major nutrient points ( rice, wheat, soybean oil and sugar ) in the international market during 2003-2007 ( Table 3 ) . Since Bangladesh is an import’dependent little economic system, a positive relationship is expected to be between universe nutrient monetary values and domestic rising prices. As the weight of nutrient points in the ingestion is 58.84 per centum at the national degree, lifting universe nutrient monetary values would act upon overall rising prices in Bangladesh.

? Changes in Diesel monetary values

Global oil monetary values have been lifting steadily holding macroeconomic impact on our

economic system. Recently, UNDP ( 2007 ) has rated Bangladesh as one of the high oil monetary value vulnerable states. However, two factors are pertinent to measure the impact of oil monetary value alteration on rising prices. First, the current government of administered pricing of crude oil products1 has involved important slowdowns in seting to universe monetary values. Second, the bing building of CPI excludes Diesel, which constitutes more than 60 per centum of entire one-year import of crude oil merchandises. Consequently, its major impact is indirect through

conveyance menus and irrigation costs. From Figure 5, we observe that by and large every hiking in diesel monetary value is followed by a lifting tendency of point-to point rising prices in one to three months lag. 1 The pass-through coefficient of Diesel is 0.43 significance that 43 per centum of diesel monetary value addition has been passed on to consumers ( UNDP, 2007 ) .

? Exchange rate fluctuations

Among supply-side factors, exchange rate is found to be important in explicating

rising prices in Bangladesh. A depreciation of exchange rate translates into a rise in the cost of imported trade goods by doing foreign goods more expensive, and therefore induces an addition in the domestic monetary value degree. There is a close association between exchange rate fluctuations and rising prices. Since the acceptance of a floating exchange rate government in May 2003, any depreciation of the exchange rate has been associated with a pickup in rising prices by increasing the monetary values

of imported goods. It is apparent from Figure 6 that Bangladesh Taka shows a deprecating tendency while Indian Rupee displays an appreciating tendency during the period from FY98 to FY07. The depreciation of Taka makes imported trade goods more expensive holding bearing on the domestic monetary value degree.

United Kingdom ‘s Factor:

Supply side policies are govt steps to increase productiveness in the economic system and hence switch LRAS to the right. Supply side policies normally involve cut downing obstructions to the free market or get the better ofing market failure. The cardinal macroeconomic aims of the govt include low rising prices, low unemployment, increasing the sustainable rate of economic growing and understating the balance of payments disequilibrium.

Denationalization and deregulating were an of import supply side policy of the 1980s ; they involved selling province owned assets to the private sector and increasing competition within markets. Private companies have a net income inducement to cut costs and be more efficient. Greater competition besides causes lower monetary values and more efficient methods of production, as houses compete for clients. This has enabled lower monetary values and greater productiveness in some industries. However, this policy has been comparatively unsuccessful in industries such as Rail and H2O because they are a natural monopoly and it is hard to present competition into these industries

Another illustration of supply side policies is instruction and preparation, if these policies are adopted so it enables higher labour productiveness and improved economic public presentation. However, this policy may be capable to govt failure ; for illustration, the govt may hold hapless information and put up inappropriate strategies which do non profit workers

Undertaking 06:

Economicss

The hazard of rising prices

Contentss:

‘ Inflation rate of Bangladesh

‘ Definition of rising prices

‘ Impacts of rising prices

‘ Controling rising prices

‘ Supply side economic sciences

‘ Beginning of mention

Inflation rate of Bangladesh since 1990 to 2009:

In 1990 the rising prices rate was highest rate 10.522 which average 20.47 % after that from 1991 to 1993 the rate was traveling down easy like ( -21.26, -56.26, -17.80 ) In 1995 the rate was traveling small high like but that rate was non recover before rates. In 1996 the rate was once more consecutive traveling down. From the 1997 to 1998 the rate was traveling up. After 1999 to 2001 the rate was once more traveling down, and than the rate was traveling up on 2007. And the last 2 old ages ( 2008-2009 ) the rising prices rate of Bangladesh was traveling down.

Definition of rising prices:

Inflation is a rise in the general degree of monetary values of goods and services in an economic system over a period of clip. When the monetary value degree rises, each unit of currency bargains fewer goods and services ; accordingly, rising prices is besides eroding in the buying power of money ‘ a loss of existent value in the internal medium of exchange and unit of history in the economic system. A main step of monetary value rising prices is the rising prices rate, the annualized per centum alteration in a general monetary value index ( usually the Consumer Price Index ) over clip.

Impacts of rising prices:

Keeping your nest eggs in hard currency will besides intend that you are easy losing money. Keeping physical hard currency gives no protection against rising prices, which official consumer monetary values index figures put at 1.5 % . This means that in order to keep the buying power of your difficult earned money it needs to be pulling an involvement rate of at least rising prices, sooner plus whatever revenue enhancement you pay.

If you lent money through Prosper back so, when most of its loans were extended, there ‘s a really high opportunity that you ‘ve lost money ‘ in some instances, a batch of money. ‘Of investors with a portfolio of loans that are an norm of at least two old ages old, ‘ notes Gimein, ‘folks who have lost money outnumber those who ‘ve earned 6 percent one-year return by more than six to one. ‘

One of the large jobs that Prosper ran into ‘ the monolithic recognition crunch and the resulting Great Recession ‘ could moderately be considered to be a one-off event with a low likeliness of go oning once more. But another is endemic to the theoretical account: Prosper borrowers with a given FICO mark are necessarily traveling to be more likely to default on their debts than most other people with the same recognition mark.

It was n’t meant to be that manner. Peer-to-peer loaning was meant to make a personal connexion between borrower and loaner, and hence do borrowers more likely to refund their debts than people faced with big duties to hated, faceless Bankss. But it seems that inauspicious choice effects overwhelmed the site ‘s efforts to be warm and fuzzed.

Controling rising prices:

A ) Inflation is a sustained rise in the mean monetary values of goods within an economic system ; it can besides be seen as a alteration in the buying power of money. Inflation can usually be divided into two types ‘ cost-push and demand-pull. Cost-push happens when monetary values are pulled up by lifting costs, demand-pull happens when demand outstrips supply and monetary values will hence hold to lift to suit this. Monetarists argue that rising prices is caused additions in the money supply, the entire sum of money circulating in the economic system at one clip. This is as the believe that any addition in the money supply which is non in line with the growing in end product of the economic system will take to rising prices. If the money supply was increased in the short-term so consumer disbursement.

When you introduce money into circulation out of nowhere, it lessens the value of everyone ‘s money. It is in everybody ‘s best involvement, so, to maintain rising prices low.

Supply side economic sciences:

The term ‘supply-side economic sciences ‘ is used in two different but related ways. Some use the term to mention to the fact that production ( supply ) underlies ingestion and life criterions. In the long tally, our income degrees reflect our ability to bring forth goods and services that people value. Higher income degrees and life criterions can non be achieved without enlargement in end product. Virtually all economic experts accept this proposition and therefore are ‘supply siders. ‘

‘Supply-side economic sciences ‘ is besides used to depict how alterations in fringy revenue enhancement rates influence economic activity. Supply-side economic experts believe that high fringy revenue enhancement rates strongly deter income, end product, and the EFFICIENCY of resource usage.

Beginning of Mention:

Undertaking 01:

? hypertext transfer protocol: //www.indexmundi.com/bangladesh/inflation_rate_ ( consumer_prices ) .html

Undertaking 02:

? hypertext transfer protocol: //en.wikipedia.org/wiki/Inflation

? hypertext transfer protocol: //www.bized.co.uk/virtual/dc/copper/theory/th17.htm

Undertaking 03:

? hypertext transfer protocol: //www.thisismoney.co.uk/savings-and-banking/ask-an-expert/article.html? in_article_id=495492 & A ; in_page_id=111

? By Self

? hypertext transfer protocol: //blogs.reuters.com/felix-salmon/2010/01/19/the-problem-with-peer-to-peer-lending/

Undertaking 04:

? hypertext transfer protocol: //blog.economics4development.com/how-to-tackle-inflation

? hypertext transfer protocol: //uk.answers.yahoo.com/question/index? qid=20100611143716AAzABWG

? hypertext transfer protocol: //www.blurtit.com/q929238.html

? hypertext transfer protocol: //tutor2u.net/economics/gcse/revision_notes/big_picture_inflation_remedies.htm

? hypertext transfer protocol: //tutor2u.net/economics/revision-notes/a2-macro-causes-of-inflation.html

Undertaking 05:

? hypertext transfer protocol: //www.econlib.org/library/Enc/SupplySideEconomics.html

? hypertext transfer protocol: //bdeconassoc.org/userfiles/pdf/27 % 20Sources % 20of % 20Inflation % 20in % 20Bangladesh- % 20Nasiruddin % 20Ahmed.pdf

? hypertext transfer protocol: //www.economicshelp.org/macroeconomics/as-essays/supply-side-policies-improving-econ.html

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