adeel iftikhar power point presentation

8/7/2019 Adeel iftikhar power point presentation

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ADEEL IFTIKHAR

INFLATION AND ITS EFFECTS ON

INDIVIDUALS.


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INTRODUCTION.

Inflation is the persistent rise in general price levels.

Inflation causes things to go out of the affordability bracket.

The word individuals refers to common-man.


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RESEARCH OBJECTIVES.

Effects of inflation on wages (real and nominal)

Effects on consumer spending or purchasing power.

Effects on fixed income earners( pensions and bonds)

Effects on education and health sector.

Effects on utilities (gas and petrol)

Effects on taxation and government spending (fiscal policy)


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LITERATURE REVIEW.

Inflation and welfare

published by the econometric society

author Robert e lucah.Jr

Inflation stabilization and the consumption of durable goodspublished by Blackwell for the royal economic society

Nominal wage rigidity and rate of inflation

published by BLACKWELL for the Royal economic society

High inflation and real wages

published by Palgrave MacMillan journals on behalf of theinternational monetary fund


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LITERATURE REVIEW:

It is commonly asserted that a high rate of inflation is

inimical to economic growth.

At one extrema, there is the view that a major reduction in,

or even the elimination of present high rates of inflation is apre-requisite to the attainment of reasonable rates of

economic growth.

All of the articles which are mentioned above r thoroughly

analyzed to understand the inflation and its effects on all the

other things.

Inflation is very dangerous for an economy but there should

be some inflation in economy up to 2,3 percent which will

attract the investors and economic growth will take place.


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Inflation is a disease which eats all the pillars of an economy and thereis no economy in this world who is safe from it.

Inflation stabilization and the consumption of durable goods, inflationcan only be brought down at the cost of a recession.

Which means in order to control inflation we have to sacrifice somethingelse.

If we decrease inflation employment rate will also be decrease , similaris the case with investment, so it is so dangerous that it single handedcan destroy whole of the economy.

In the article high inflation and real wages it examined that how sharpdecline in real wages effects directly the households.

In inflation wages increases nominally but in real purchasing terms theydecreases

Furthermore inflation in long run is very dangerous for an economicstructure will lead to all the other problems if it is not cured on time.

Value of money decreases with an increase in inflation.

Articles showed the relation between inflation and welfare how an increasein inflation will cut welfare with more percentage


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PRIMARY SECONDARY Primary is field research.

Seeking information directly

from a source.

Type: Questionnaire.

Secondary is desk research.

Seeking information from an

indirect source.

Type: Articles(Literature

review)

METHODOLOGY


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Sample size=30.

30 questionnaires will be filled.

Type Of Sampling:

Simple random sampling. Snowball sampling.5

METHODOLOGY


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VARIABLES

Dependant: Inflation.

Independent: Income.(positive)

Taxation.(negative)

Savings.(negative)

Investment.(positive)

Rising costs(price level).(positive)

Imports( negative)and Exports(positive).

Government spending.(positive)

Unemployment.(negative)

Interest rates.(negative)

Business profits.(positive)

Exchange rates.(negative if imports)

Wage rates.(positive)

Standard of living(negative)


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InflationTaxes Income

Standard

of living

Government

spending

Unemployment

Trade

Consumption


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QUESTIONNAIRE:

A questionnaire is a research instrument consisting of a series

of questions and other prompts for the purpose of gathering

information from respondents.

C:\Users\Adeel\Documents\Adeel

Questionnaire.docx


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HYPOTHESIS:

Ho: Real income will remain same with an increase in

inflation

H1:Real income will decrease with an increase in inflation

Ho: Purchasing power has positive relation with inflation.

H1: Purchasing power has an inverse relation with inflation.

Ho: Government spending can not decrease effect ofinflation.

H1:Government spending can decrease effect of inflation.


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Ho: Standard of living is not effected due to inflation.H1: Standard of living is effected due to inflation.

Ho: Trade is not effected due to inflation.

H1: Trade is effected due to inflation.

Ho: Increase in inflation will have no effect on taxes.

H1: Increase in inflation will effect taxes.

Ho: Inflation causes unemployment to decrease.

H1: Inflation causes unemployment to increase.


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HYPOTHESIS TESTING

The single Regression Model is used for the testing of the Hypothesis.

Ho: Real income will remain same with an increase in inflation

H1: Real income will decrease with an increase in inflation

A

s t value is less than 2 so we do not reject H0.


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Ho: Purc si g power s positive rel tionwit infl tion.

H1: Purc sing power s n inverse rel tionwit infl tion.

As t value is less than 2 so we do not reject H0.


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Ho: Government spending c nnot decreaseeffect of inflation.

H1: Government spending candecreaseeffect of inflation.



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Ho: Standardof living is not affecteddue to inflation.

H1: Standardof living is affecteddue to inflation.



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H0: Trade is not affecteddue to inflation.

H1: Trade is affecteddue to inflation.



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ONE VARIABLE ANALYSIS

1) INCOME


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2)CONSUMPTION (PU CHASING POWE )


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3)GOVE NMENT SPENDING


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4) STANDARD OF LIVING


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5) UNEMPLOYMENT


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GRAPHS OF INDEPENDENT VARIABLE

INCOME X1 (box and whisker plot)


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CONSUMPTION X2 (frequency istogram)


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GOVERNMENT SPENDING X3 (dot plot)


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STANDARD OF LIVING X4 (boxandwhisker plot)


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UNEMPLOYMENT X6

(frequency histogram)


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CorrelationAnalysis

Correlation analysis shows the relationship between the variables


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MULTIPLE REGRESSIONANALYSIS


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ConstraintsSimple size taken is 30, so unable to get appropriate results from the research because in

order to get accurate results simple size should be large.

ConclusionThe research was carried out to analyze the effects of inflation on individuals in a society. It wasfound that Inflation has a direct relation with each of us and it directly affects our life in many

ways. For example it decreases the income in real terms.Although it provides employment and

economic progress but it decreases the consumption power of a common man. In inflation

standard of living also decreases and people have to cut down many expenses. Government

spending also has a major role in inflation; if government starts giving subsidies in the period of

inflation then the pressure of inflation from a common man can be reduced like subsidies onutilities etc. Income does increases in nominal terms but not in real terms so it directly affects the

consumers. By reading the articles deeply it can be concluded that government or the controlling

class should consider this problem very seriously and should work on it. Inflation is also

necessary for an economy but if it is anticipated and mild only. If inflation is unanticipated and

hyper then the things will become very difficult and it will create many problems not just for

individuals but also for the whole economy. Inflation in economy will give supernormal profits tobusiness which will eventually lead to economic growth and that will create jobs for the people

and unemployment rate will be decreased. For an growing economy inflation is a must factor or

you can say that you cannot get progress without inflation because inflation cannot be taken out

of an economic system it is a compulsory part of the economic system. So after all the primary

and secondary research it can be concluded that governments should keep an eye on the inflation

rate because it directly affects the lives on individuals and to keep it in a controlled rate is veryimportant for the economy.