INFLATION - MEANING AND DEFINITIONS:

MEANING AND DEFINITIONS:

MEANING OF INFLATION:

Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly

DEFINITIONS:

Prof. Crowther has defined inflation as "a state in which the value of money is falling,i.e. prices are rising."
According to prof. kemmerer, inflation means "too much currency in relation to the physical volume of business being done."

THIS DEFINITION INVOLVES A COMPARISON BETWEEN TWO THINGS- SUPPLY OF CURRENCY ON ONE SIDE AND SUPPLY OF PHYSICAL GOODS AND SERVICES ON OTHER SIDE.

“The word inflation in the broadest possible sense refers to any increase in the general price-level which is sustained and non-seasonal in character”-Peterson.
According to Coulborn inflation can be defined as, “too much money chasing too few goods.”
According to Parkin and Bade, “Inflation is an upward movement in the average level of prices. Its opposite is deflation, a downward movement in the average level of prices. The boundary between inflation and deflation is price stability.”
As per Johnson, “Inflation is an increase in the quantity of money faster than real national output is expanding.”

Keynes has presented his view that true inflation is the one in which the elasticity of supply of output is zero in response to increase in supply of money.

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