Inflation

ECONOMICS 1B

INDIVIDUAL ASSIGNMENT

BCOM BUSINESS MANAGEMENT

CLEO CHANT’E JONITA PHILLIPS

201609449

DAMELIN BOKSBURG

TABLE OF CONTENT

* Introduction 3

* Defining Inflation 4

* Effect of inflation on economy and social 4

* Effect of inflation on distribution 5

* Inflation targeting south Africa 5-6

* Conclusion 6

* Bibliography 7

1.

INTRODUCTION

Economic growth plays an essential role in inflation it is the increase in the capacity of an economy to produce goods and services, compared from one period of time to another.

INFLATION

Inflation is the rate at which the general level of prices for goods and services increase, where the purchasing power decrease.

The SARB use various methods for reducing inflation , they primarily use changing the interest rate to keep inflation within the government target.

The Monetary Policy Committee meets every month to set interest rates based on future predictions of inflation, they try to reduce inflationary pressures before it build up. To reduce inflation the Monetary Policy Committee can increase the base interest rate, which leads to a increase in interest rates, which will make borrowing more expensive and savings more attractive, therefore consumption and investment will decrease, leading to the Aggregate Demand to increase at a slower rate and help reduce inflation.

Effects of inflation on Economy and Social:

* The increase in prices is known as a inflation...