Inflation is an increase in the general price level accompanied by a depreciation of the monetary unit; the imbalance between aggregate supply and aggregate demand in the direction of exceeding the latter, which has developed simultaneously in all markets in the commodity money market and the resource market. In a market economy, inflation is expressed in the growth of the general price level, this is an open form of inflation. Open inflation is accompanied by a decrease in purchasing power and depreciation of money.

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Definition of inflation. Measurement of inflation: moderate, galloping and hyperinflation. Open and suppressed inflation.

Inflation this is an increase in the general price level, accompanied by a depreciation of the monetary unit; the imbalance between aggregate supply and aggregate demand in the direction of exceeding the latter, which has developed simultaneously in all markets (in the commodity, money and resource markets). In a market economy, inflation is expressed as an increase in the general price level (this isopen form of inflation). Open inflation is accompanied by a decrease in purchasing power and depreciation of money.

In an economy with fixed prices, the resulting inflation retains the form of a deficit without developing into open inflation. However, if prices are released, the shortage will quickly disappear and the general price level will rise. Many economists believedeficit manifestation of inflation in a latent form. The growing deficit is accompanied by queues, a decrease in the quality of goods and services, the development of a bureaucratic and black market; Thishidden form of inflation, or suppressed inflation.

With inflation, prices can fluctuate at different speeds and in different directions at the intersectoral and intrasectoral levels. Inflation accompanied by price imbalance is calledunbalanced inflation. At balanced inflationprices move in the same direction and at about the same rate.

Open inflation is usually measured in terms of the rate of increase in the price level per year and is calculated as a percentage:

where  - inflation rate in percent for the year, P1 the price level of the given year, P0 the price level of the previous year. The GDP deflator, consumer price index or industrial price index is used as an indicator of the price level.

The concept of open inflation should not be confused with price increases caused, for example, by seasonal fluctuations in supply and demand, natural disasters or economic cycles.An increase in prices that occurs not due to a distortion in the assessment of resources, goods and services that violates the proportions of exchange and distribution, but for some other reason, is not inflation..

Inflation manifests itself in varying degrees. According to the rates, moderate (or creeping) inflation, galloping inflation and hyperinflation are distinguished.Moderate (or creeping)called inflation at rates up to 10% per year; with it, the depreciation of money is insignificant. galloping inflation is limited from 10% to 100% per year; money depreciates rather quickly, so either a stable currency is used as prices for transactions, or prices take into account the expected inflation rate at the time of payment; trades are indexed. Hyperinflation in countries with developed market economies it is determined by rates of over 100% per year, in countries with unstable economies much higher; there is a rapid depreciation of money, prices can be recalculated several times a day; the banking system is destroyed, production and the market mechanism as a whole are paralyzed.

Helps recognize hyperinflationKagan's hyperinflation criterion. The American economist believes that hyperinflation in developing countries can be considered the growth rate of the price level, more than 50% per month, which, when converted to annual inflation rates, is 13,000%. Hyperinflation is considered overcome if during the previous 12 months the inflation rate did not exceed 50%.

Types of inflation

open inflation develops freely and is not restrained by anyone.

Hidden inflation- this is inflation that occurs as a result of the fact that the state takes measures aimed at directly restraining the prices of economic goods, on the one hand, and the income of the population, on the other.

Creeping (or Moderate) Inflation- inflation, which develops gradually, when prices increase slightly, not exceeding 10% per year. Moderate inflation (3-5% per year) in the developed countries of the West is not considered as a negative factor. On the contrary, it is believed that it stimulates the development of the economy, gives it the necessary dynamism.

Galloping inflation- inflation, in which prices increase rapidly - by 10-100% annually. At the stage of galloping inflation, there is a decline in production and a reduction in trade, the incentive to invest is lost, the process of social accumulation is held back, there is an outflow of capital from the production sphere to the sphere of circulation, i.e., the economic equilibrium is unbalanced.

Hyperinflation is inflation at which the annual rate of price growth exceeds 100%. It means a deep economic and social crisis in the country.

Balanced inflation- inflation, in which the prices of different commodity groups relative to each other do not change. Prices rise rather slowly and simultaneously for most goods.

Unbalanced inflation- inflation, in which the ratio of prices in different product groups varies to a different extent for each type of product.

Expected inflation- moderate, gradual inflation, which can be predicted for a certain period. Quite often this is a direct result of the government's anti-inflationary actions.

Unexpected inflation It is characterized by a sudden jump in prices due to the influence of inflationary expectations of the aggregate demand of the population for consumer goods, and commodity producers - for raw materials and means of production.

Stagflation- this is inflation, which is accompanied by the stagnation of production and at the same time an increase in the level of prices and unemployment.

The inflation rate is determined by a formula using two main price indices. The price index shows the rate of price growth. If in the year t the price index (IC) is 115%, then this means that in this year prices have increased by 15% compared to t -1 year. The rate of inflation growth is determined on the basis of price indices according to the formula

Socio-economic consequences of inflation

Inflation is a serious disease of the economy with profound socio-economic consequences. There is no country in the world that has not suffered losses from inflation in one way or another.

Economic Consequences of Inflation

First, inflation destroys normal economic ties, increases chaos and disproportions in the economy, and disorganizes the investment process, since with an uncontrollable rise in prices, the goal of production (profit) can be achieved without increasing production.

Secondly, capital is poured from the sphere of production into the sphere of circulation, primarily into speculative commercial structures, where they turn around faster and bring huge profits, and also move abroad in search of greater and guaranteed profits. Speculation, shadow economy, and corruption are on the rise.

Thirdly, the normal functioning of the monetary system is disrupted. The depreciation of money undermines the incentives to accumulate it, giving rise to such a phenomenon as "flight from money", when entrepreneurs and the population prefer to invest money savings in goods, real estate and other material values. Loan agreements are being broken, since it is unprofitable to provide long-term loans at low interest rates during inflation, since the creditor will have to receive debts in depreciated money.

Fourthly, commodity-money relations are gradually curtailing, and direct product exchange based on barter transactions is expanding. This leads to the loss of its economic functions by money, and the exchange relations roll back - to a simple, or random, form of value.

Fifth, inflation has a negative impact on the country's international economic and monetary relations. It undermines the competitiveness and exports of domestic goods, while at the same time encouraging the import of goods from abroad, since they are sold at high prices in the domestic market. Inflation holds back the inflow of foreign capital, reduces the official and market rates of the national currency due to its depreciation.

Social Consequences of Inflation

Economic science believes that inflation is a kind of tax with which the state, by issuing unsecured money, additionally taxes the income of the population, which leads to negative social consequences. More J.M. Koine noted that by a prolonged process of inflation, governments can secretly and unnoticed confiscate a significant part of the wealth of their citizens.

First, inflation reduces the standard of living of all segments of the population, especially those with a steady income, as the rate of income growth lags the rate of growth in the prices of goods and services.

Secondly, inflation devalues ​​the population's previous money savings in banks, insurance policies, annuities and other assets with a fixed value.

Thirdly, inflation increases unemployment, undermines the motivation for effective labor activity, increases the social differentiation of the population and social tension in society.

Anti-inflationary state policy

To combat inflation, the state pursues an anti-inflationary policy, which provides for the implementation of tactical (short-term) measures to reduce the level of existing inflation and strategic (long-term) measures aimed at preventing inflation in the long term.

The main measures of anti-inflationary state policy include:

• - growth of production and saturation of the market with goods;
• - limiting the issue of money;
• - overcoming the state budget deficit and reducing the public debt;
• - stimulation of savings and investments;
• - conducting sound credit and tax policy;
• - stimulating the development of medium and small businesses;
• - increase in non-cash money circulation;
• - wide introduction of electronic payment system;
• - reduction of barter transactions;
• - exchange rate regulation;
• - development of the securities market;
• - suppression of inflationary expectations of the population;
• - carrying out monetary reforms of the confiscation type.

Deflation- a general decrease in the average price level in the economy. This is the opposite of inflation.

As a result of the implementation of the monetary reform in Ukraine in September 1996, the temporary monetary unit "coupono-karbovanets" was replaced by a new Ukrainian national currency - the hryvnia, which became the only legal tender on the territory of Ukraine. The introduction of the hryvnia and the implementation of a long-term anti-inflationary state policy were important factors in a significant reduction in inflation and stabilization of money circulation in the country (Table 6.2).

EDUCATIONAL TRAINING

Basic terms and concepts

General money equivalent. Measure of value. Recourse tool. A means of accumulation. Instrument of payment. Paper money. Banknote. Promissory note. Check. Credit card. Electronic money. Money supply. Money unit. Exchange rate. Convertibility of money. Inflation. anti-inflation policy.

Control questions and tasks

• 1. Describe the basic concepts of the emergence of money.
• 2. What is the essence of money?
• 3. Expand the ratio of the main functions of money.
• 4. What are the features of paper and credit money?
• 5. What is the liquidity of money?
• 6. What are the negative effects of barter?
• 7. What is money supply? Name its structural elements.
• 8. What should be understood as the monetary system? What elements does it consist of?
• 9. Formulate the laws of circulation of money.
• 10. Write the formula for the balance of money and commodity mass I. Fisher.
• 11. What is the exchange rate and by what methods is it determined?
• 12. What are the causes of inflation?
• 13. What is the essence of inflation? Name its main types and types.
• 14. What are the socio-economic consequences of inflation and the main ways to overcome them?

Literature

• 1. Bazilevich V.D. Macroeconomics: assistant / V "D. Bazilevich, K.S. Bazilevich, L.O. Balastryk; edited by V.D. Bazilevich. - K .: Knowledge, 2007. - 703 p.
• 2. Bazilevich V.D. Rinkova economy: Basic concepts and categories / V.D. Bazilevich, K.S. Bazilevich, L.O. Ballast Rick. - K.: Knowledge, 2008. - S. 44-50.
• 3. Galchinsky A. The theory of pennies: Navch.-Method, pos. / A. Galchinsky. - K .: Foundations, 2001.
• 4. Gritsenko O.G. Pennies and penny-credit policy / O.G. Gritsenko. - K .: Foundations, 1996.
• 5. Pennies and a loan: a handyman / for a zag. ed. M.I. Savchuk. - K.: KNEU, 2001. - 602 p.
• 6. Lagutin V D. Pennies and pennies: navch. posib. / V.D. Lagutin. - K .: T-vo "Knowledge", KOO, 1998.
• 7. Marx K. Capital / K. Marx. - M., 1951. - T. 1. - Ch. 3.
• 8. Naidenov B.C. inflation and monetarism. Lessons of anti-crisis policy / B.C. Naidenov, A.Yu. Smenkovsky.
• - TO. ; Belaya Tserkov: Belotserkovsky book factory, 2003. - Ch. 2, paragraph 1; ch. 3, paragraph 1.
• 9. Popov V.M. Pennies and Laws of Law / V.M. Popov; KDTEU. - K., 1998.
• 10. Fisher I. Purchasing power of money / I. Fisher. - M.: Delo, 2001.
• 11. Fisher S. Economy / S. Fisher, III.R. Dornbusch, D. Schmalenzi. - M.: Delo, 1993. - S. 580-595, 653-667.
• 12. Friedman M. Quantitative theory of money / M. Friedman. - M.: Elf, 1996. - 186 p.
• 13. Harris L. Monetary theory /L. Harris. - M.: Progress, 1990.
• 14. Chu khno A.A. Money / A.A. Chukhno. - K.: Ukraine, 1997.- 510 p.
• 15. Chukhno A.A. The development of the theory of pennies and the practice of regulating penny obigu: Special course / A.A. Chukhno; Kiev, university. Taras Shevchenko. - K., 1994. - 116 p.
• 16. Yushchenko V. Groshi: development of populace and propositions in Ukraine / V. Yushchenko, V. Lisitsky. - K.: Scarbi, 1998.
• - 288 p.
• 17. Yushchenko V. Key problems of monetary and exchange rate policy in Ukraine / V. Yushchenko // Bulletin of the NBU. - 2000. - No. 2.

- incomplete closure of the foramen ovale in the interatrial septum, which normally functions in the embryonic period and overgrows in the first year of a child's life. An open oval window can be manifested by cyanosis of the nasolabial triangle, a slowdown in physical development, shortness of breath and tachycardia, sudden fainting, headache, frequent acute respiratory viral infections and bronchopulmonary diseases. Diagnosis of an open oval window includes ECG (at rest and after exercise), normal and Doppler echocardiography, radiography, probing of the heart cavities. With an open oval window, anticoagulant therapy can be used, if necessary, surgical treatment (endovascular occlusion of the defect).

General information

An open foramen ovale is a congenital communication between the right and left atria, which is a residual element of the foramen ovale of the fetal heart. The interatrial opening with a valve is laid in utero and is a necessary condition for the functioning of the cardiovascular system during this period of development. Thanks to the open oval window, part of the placental, oxygenated blood passes from the right atrium to the left, bypassing the undeveloped, non-functioning lungs, and ensures normal blood supply to the neck and head of the fetus, the development of the brain and spinal cord.

In healthy term infants under normal developmental conditions, the foramen ovale usually closes and ceases to function as early as the first 12 months after birth. But its closure occurs individually for each: on average, by the age of 1 year, the oval window remains open in 40-50% of children. The presence of an open oval window after 1-2 years of a child's life is referred to as minor anomalies in the development of the heart (MARS - syndrome). In mature patients, an open foramen ovale is detected in approximately 25-30% of cases. Sufficiently high prevalence of an open oval window determines the relevance of this problem in modern cardiology.

Causes of an open oval window

All babies are born with an open foramen ovale. After the first independent breath, the newborn turns on and begins to fully function the pulmonary circulation, and the need for an open oval window disappears. An increase in blood pressure in the left atrium compared to the right one leads to the covering of the foramen ovale valve. In most cases, the valve closes tightly and is completely overgrown with connective tissue - the open oval window disappears. Sometimes the hole closes partially or does not grow at all, and under certain conditions (with coughing, crying, screaming, tension of the anterior abdominal wall), blood is discharged from the right atrial chamber to the left (functioning oval window).

The reasons for the incomplete closure of the foramen ovale are not always clear. It is believed that hereditary predisposition, prematurity of the child, congenital heart defects, connective tissue dysplasia, exposure to adverse environmental factors, smoking and drinking alcohol by a woman during pregnancy can lead to an open oval window. Due to genetic characteristics, the diameter of the valve may be smaller than the diameter of the foramen ovale, which will prevent its complete closure.

An open foramen ovale may be associated with congenital malformations of the mitral or tricuspid valves, an open ductus arteriosus.

Risk factors for opening the valve of the oval window can be significant physical exertion in athletes involved in weightlifting, wrestling, and athletic gymnastics. Especially relevant is the problem of an open oval window in divers and divers diving to a considerable depth and having a 5 times higher risk of developing decompression sickness. In patients with thrombophlebitis of the lower extremities or pelvis with a history of PE episodes, contraction of the pulmonary vasculature can cause an increase in pressure in the right heart and the appearance of a functioning open foramen ovale.

Features of hemodynamics with an open oval window

The open foramen ovale is located at the bottom of the oval fossa on the inner left wall of the right atrium, often small in size (the size of a pinhead) and slit-like. The size of the open foramen ovale averages 4.5 mm, but can be as large as 19 mm. An open oval window, in contrast to atrial septal defect, has a valvular structure that ensures the inconstancy of the interatrial message, the ability to discharge blood in only one direction (from the pulmonary circulation to the large).

The clinical significance of an open foramen ovale is ambiguous. The open foramen ovale may not cause hemodynamic disturbances and not have a negative impact on the health of the patient due to its small size and the presence of a valve that prevents blood shunting from left to right. Most people with an open foramen ovale are unaware of this anomaly and lead a normal life.

The presence of an open foramen ovale in patients with primary pulmonary hypertension is considered to be prognostically favorable in terms of life expectancy. However, the excess pressure in the right atrium compared to the left at an open oval window leads to the periodic occurrence of a right-to-left shunt that passes a certain amount of blood and leads to hypoxemia, transient cerebrovascular accident (TIA), the development of life-threatening complications: paradoxical embolism, ischemic stroke , myocardial infarction , kidney infarction .

Symptoms of an open oval window

The open oval window has no specific external manifestations, in most cases it proceeds latently, sometimes it can be accompanied by poor symptoms. Indirect signs of an open oval window may be: a sharp pallor or cyanosis of the skin in the area of ​​​​the lips and nasolabial triangle during physical exertion (crying, screaming, coughing, straining, bathing a child); tendency to frequent catarrhal and inflammatory bronchopulmonary diseases; slowing down the physical development of the child (poor appetite, insufficient weight gain), low endurance during physical exertion, combined with symptoms of respiratory failure (shortness of breath and tachycardia); sudden fainting and symptoms of cerebrovascular accident (especially in young patients, with varicose veins, thrombophlebitis of the lower extremities and small pelvis).

Patients with an open foramen ovale may experience frequent headaches, migraine, postural hypoxemia syndrome - the development of shortness of breath and a decrease in arterial oxygen saturation in a standing position with an improvement in the transition to a horizontal position. Complications of an open oval window are rare. Paradoxical embolism of the cerebral vessels, which aggravates this anomaly, is characterized by a sudden development of neurological symptoms and a rather young age of the patient.

Diagnosis of an open oval window

The study of the anamnesis and physical examination of the patient often does not immediately determine the presence of an open oval window, but can only allow the possibility of this anomaly of the interatrial septum (skin cyanosis, fainting, frequent acute respiratory viral infections, lagging child development). Auscultation helps to identify the presence of heart murmurs as a result of an abnormal shunt of blood from a higher pressure chamber to a lower pressure chamber.

To establish an accurate diagnosis of an open oval window, instrumental studies and imaging methods are used: ECG (at rest and after exercise), conventional and Doppler echocardiography, chest x-ray, probing of the heart cavities.

With an open oval window, changes appear on the electrocardiogram, indicating an increase in the load on the right parts of the heart, especially on the right atrium. Older individuals with an open foramen ovale may show radiological signs of enlargement of the right heart chambers and an increase in blood volume in the pulmonary vasculature.

In newborns and young children, transthoracic two-dimensional echocardiography is used, which allows visually determining the presence of an open oval window and its diameter, obtaining a graphic image of valve leaflet movements in time, and eliminating an atrial septal defect. Doppler echocardiography in graphical and color mode helps to clarify the presence and size of an open foramen ovale, to identify turbulent blood flow in the foramen ovale, its speed and the approximate volume of the shunt.

In older children, adolescents and adults, a more informative transesophageal echocardiography, supplemented with a bubble contrast test and a strain test (Valsalva test), is used to diagnose an open oval window. Bubble contrast enhances the visualization of the open foramen ovale, allows you to determine its exact dimensions, and evaluate the pathological blood shunt.

The most informative, but more aggressive method for diagnosing an open oval window is cardiac sounding, which is performed immediately before surgical treatment in a specialized cardiac surgery hospital.

Patients with varicose veins, thrombophlebitis, cerebrovascular accident, chronic lung diseases, which are at risk of developing paradoxical embolism, should be examined for the presence of an open oval window.

Treatment of an open oval window

With an asymptomatic course, an open oval window can be considered a variant of the norm. Patients with an open foramen ovale in the presence of an episode of transient ischemic attack or a history of stroke for the prevention of thromboembolic complications are prescribed systemic therapy with anticoagulants and antiplatelet agents (warfarin, acetylsalicylic acid). The method of control of anticoagulant therapy is the international normalized ratio (INR), which, with an open oval window, should be in the range of 2-3.

The need to eliminate the open foramen ovale is determined by the volume of shunted blood and its effect on the functioning of the cardiovascular system. With a small discharge of blood, the absence of concomitant pathology and complications, surgery is not required.

With a pronounced pathological discharge of blood from the right atrium to the left, a low-traumatic X-ray endovascular occlusion of the open oval window is performed. The operation is carried out under X-ray and echocardioscopic control using a special occluder, which, when opened, completely clogs the hole.

Prognosis of an open oval window

Patients with an open foramen ovale are advised to have regular follow-up with a cardiologist and echocardiography. The performed endovascular occlusion of the open foramen ovale allows patients to return to the normal rhythm of life without restrictions. In the first 6 months after surgical treatment of an open oval window, antibiotics are recommended to prevent the development of bacterial endocarditis. The greatest effect of endovascular closure of the open foramen ovale was noted in patients with platypnea who had a pronounced shunt of blood from right to left.

Inflation is an increase in the general level of prices for goods and services. With inflation, for the same amount of money, after some time, it will be possible to buy fewer goods and services than before. In this case, they say that over the past time it has decreased, the money has depreciated - it has lost part of its real value.

Inflation should be distinguished from a price hike, as it is a long, steady process. Inflation does not mean an increase in all prices in the economy, because the prices of individual goods and services can rise, fall or remain unchanged. It is important that the general price level change, i.e. GDP deflator.

Causes of inflation

In economics, the following causes of inflation are distinguished:

1. An increase in government spending, to finance which the state resorts to money emission, increasing money supply beyond the needs of commodity circulation. It is most pronounced in war and crisis periods.
2. Excessive expansion of the money supply due to mass lending, and the financial resource for lending is taken not from, but from the issue of unsecured currency.
3. The monopoly of large firms on the determination of prices and their own production costs, especially in the primary industries.
4. The monopoly of trade unions, which limits the ability of the market mechanism to determine the level of wages acceptable to the economy.
5. A reduction in the real volume of national production, which, with a stable level of money supply, leads to an increase in prices, since a smaller volume of goods and services corresponds to the same amount of money.
6. An increase in government taxes and duties, excises, and so on, with a stable level of money supply.

Types of inflation

• Demand inflation- is generated by an excess of aggregate demand compared to the real volume of production (deficit of goods).
• Supply inflation(costs) - the rise in prices is caused by an increase in production costs in terms of underutilized production resources. An increase in unit costs reduces the volume of products offered by producers at the current price level.
• Balanced inflation- the prices of different goods remain unchanged relative to each other.
• Unbalanced inflation- the prices of different goods vary in relation to each other in different proportions.
• Projected inflation is inflation, which is taken into account in the expectations and behavior of economic entities.
• Unpredictable inflation- comes as a surprise to the population, as the actual growth rate of the price level exceeds the expected one.
• Tailored Consumer Expectations- changing consumer psychology. Often arises from the dissemination of information about future potential inflation. The increased demand for goods allows entrepreneurs to raise the prices of these goods.
• Stagflation- this is a situation in which the economic recession and the depressed state of the economy (stagnation and rising unemployment) are combined with rising prices - inflation.
• Agflation is agricultural inflation. This term was coined by economists from the investment bank Goldman Sachs to refer to a sharp increase in prices for agricultural products.

Swedish economist B. Hansen introduced the concepts of open and hidden (repressed) inflation. open inflation manifested in a continuous rise in prices. Hidden inflation characterized by the fact that prices and wages are under the strict control of the state, and the main form of expression is a commodity deficit. In the USSR, inflation was hidden.

The suppression of inflation is characterized by external price stability with active government intervention. An administrative prohibition to raise prices usually leads to a growing shortage of those goods for which prices would have to rise without government intervention, not only because of the initial increased demand, but also as a result of a decrease in supply. State subsidization of the difference in prices for the producer or consumer does not reduce supply, but additionally stimulates demand.

Uneven growth of prices by commodity groups generates inequality of profit rates, stimulates the outflow of resources from one sector of the economy to another (for example, in Russia from industry and agriculture to trade and the financial and banking sector).

Types of inflation by price growth rates

Depending on the rate of price growth, the following types of inflation are distinguished:

1. Creeping (moderate) inflation- price growth of less than 10% per year. Many economists consider it as an element of the normal development of the economy, since, in their opinion, insignificant inflation (accompanied by a corresponding increase in the money supply) is capable, under certain conditions, of stimulating the development of production and the modernization of its structure. The growth of the money supply accelerates the payment turnover, reduces the cost of loans, promotes the intensification of investment activity and the growth of production. The growth of production, in turn, leads to the restoration of equilibrium between the commodity and money supply at a higher price level. The average inflation rate in the EU countries in recent years has amounted to 3-3.5%. At the same time, there is always a danger that creeping inflation will get out of state control. It is especially high in countries where there are no well-established mechanisms for regulating economic activity, and the level of production is low and is characterized by the presence of structural imbalances;
2. Galloping inflation— annual price growth from 10 to 50%. Dangerous for the country's economy and requires urgent anti-inflationary measures. Predominates in;
3. Hyperinflation- prices are growing very quickly, from tens (from 50%) to several thousand and even tens of thousands of percent per year. It arises due to the fact that to cover budget deficit The government issues an excess amount of banknotes. It paralyzes the economic mechanism; during hyperinflation, a transition to barter exchange usually occurs. It often occurs during times of war or crisis.

The opposite process of inflation is a decrease in the general price level (negative growth). In the modern economy, it is rare and short-term, usually seasonal. For example, grain prices tend to decline immediately after harvest. Prolonged deflation is characteristic of very few countries.

Inflation factors

The rate of money exchange, rather than the money supply as a factor in inflation:

Inflation functions

Inflation is used to redistribute national income and social wealth in favor of the initiator of the inflationary process, which in the vast majority of cases is the currency emission center (FRS). At the same time, if the issue of the national currency occurs due to the purchase of foreign currency by the central bank, there is a transnational redistribution of social wealth.

Discussion is closed.

Inflation, as well as unemployment; represents one of the most serious macroeconomic problems. As an economic phenomenon, inflation appeared almost with the emergence of money, with the functioning of which it is directly related. inflation(from lat. inflation - swelling, swelling) - a continuous increase in the average price level in the economy, the depreciation of money, which occurs due to the fact that there are more of them in the economy than necessary, i.e. the money supply in circulation "swells". A more rigorous definition of inflation, taking into account the causes and some consequences of an increase in the average price level in the economy, is as follows: inflation is an imbalance in supply and demand (a form of general imbalance in the economy), manifested in rising prices and depreciation of money.

There are many kinds and types of inflation. So, from the point of view of the rate of price growth, there are moderate, creeping, galloping and hyperinflation. moderate inflation(price growth does not exceed 10% per year) does not pose a serious threat to the economy. This inflation is also called natural, since such a rise in prices does not prevent the economic system from developing successfully, does not create problems for either producers or consumers. Creeping inflation(growth in prices from 10 to 20% per year) requires adjustment of the monetary policy of the state, as there is a danger of its transition to galloping inflation. Galloping inflation(price growth rate ranges from 20% to 200% per year) can be observed in the economic system for quite a long time. However, most often the functioning of the economy in conditions of such inflation is depressive, there are no incentives for the development of the business sector, since the profits are "eaten away" by inflation. There are serious economic disruptions here. Money quickly loses its value, and the population quickly materializes it. Financial markets are in decline. Galloping inflation requires a radical revision of monetary policy. Hyperinflation(annual price growth exceeds 200%) requires decision-making not only of an economic, but also of a political nature, since such high inflation rates mean a probable economic collapse of the country, primarily related to commodity-money relations. Under conditions of hyperinflation, money ceases to play its proper role in the economy, barter exchange reaches its peak, prices are extremely unstable, and the well-being of even the most affluent segments of the population is destroyed.

The degree of predictability is expected (projected) inflation And unexpected inflation, i.e. sudden. Naturally, expected inflation is more preferable than unpredictable, since preliminary information about possible inflation makes it possible to develop and take a number of measures to prevent its negative consequences. Expected inflation can be predicted for any period, or it is planned by the government of the country.

If the prices of all goods and services produced in a society rise at about the same rate, then one speaks of balanced inflation. If prices for different goods and services change in different proportions, then in the economy inflation unbalanced.

By its nature, inflation is open, suppressed and hidden. Open (explicit) inflation manifested in a steady increase in the price level and is typical for countries with a market economy. It does not suppress or destroy the mechanism of the market. Suppressed inflation usually due to general state control and the suppression of the market mechanism, it occurs in countries with a planned economy or in countries with strong state regulation, turning into universal control. The state assumes the function of controlling prices, artificially holding them at a level, most often below the equilibrium level. The result is a global gap between supply and demand. Having crossed the critical point, this gap turns into an inflationary one, and a stable deficit appears in the economy. Under these conditions, the masses of commodities begin to move from the official economy to the shadow economy. Suppressed inflation creates a shadow market because it is based on the gap between the administratively set yen and higher black market prices that equalize supply and demand. Thus, if open inflation finds its expression in rising prices, then suppressed inflation is expressed in a shortage in the commodity market and the development of a shadow market, suppressed inflation manifests itself in an increase in the savings of the population and firms. It is very difficult to fight this type of inflation, since market mechanisms do not work. To combat suppressed inflation, it must first be converted to open inflation. Suppressed inflation is often referred to as hidden inflation. Some economists single out hidden inflation separately, believing that hidden inflation associated with a deterioration in the quality of products at constant prices for it or with the "washout" of cheap goods from production, and hence from consumption.

The best option for any economy is open, moderate, balanced and predictable inflation. But in reality, this situation rarely occurs. Therefore, it is believed that it is preferable to have open, balanced and predictable inflation, albeit with fairly high growth rates of the average price level and the economy, than a small inflation (up to 20% per year), but suppressed, unpredictable and unbalanced.

Open inflation is measured using price indices.

For your information. Price indices as measures of inflation have some drawbacks: price indices are distinguished by a high level of aggregation (generalization); they lack selectivity; do not respond to or reflect hidden price increases.

Price indices are used to measure inflation rates (inflation rate, price growth rates). The situation looks quite simple when two successive periods are compared. In this case, the first period is taken as the base period, i.e., 100%, and the price index of the current period can be used to “judge the level of inflation.

Rates of Development of Inflationary Processes in Russia in 2006

The situation looks more complicated if the base period is not the previous period, but some other of the previous ones. In this case, the inflation rate can be measured as follows:

Where ? - inflation rate (price growth rate); P t - price index of the current period, P t -1 - price index of the previous period. This is the case when the price index of some 0th period, i.e. P 0 , is taken as the base one.

There is another method of quantitative measurement of inflation - a method called "rules of magnitude 70". Using this approach, you can determine the approximate number of years required for inflation to double:

where K is the number of years required to double the money supply in circulation at the annual rate of price growth i. For example, if prices in the economy increase by 14% annually, then after 5 years prices will double.

And now a few words about measuring suppressed inflation. Its level is much more difficult to assess than the level of open inflation. The construction of price indices is impossible here, therefore, the indices themselves are not applicable, and other methods of quantitative measurement of inflation that we have considered do not “work”. The level of suppressed inflation is judged by the following indicators that allow at least indirectly characterize its scale: the share of goods and resources distributed by planned methods; the share of barter transactions in the total trade turnover; the growth of savings, not supported by the corresponding volumes of production of goods.