Since the economy of our and many other countries acquired a market character, the role of money has grown significantly. They began to depend on them much more than before. They are the main element of the phenomenon of inflation.
This process is characterized by analysts as one of the most painful in the field of finance and
money circulation. Generally speaking, the concept of inflation implies a rise in the general price level in a country. This is not the only criterion characterizing this phenomenon, but it is the main one.
The concept of inflation can be supplemented by the following properties:
- depreciation of money;
- imbalance of supply and demand;
- decreased purchasing power of money.
Thus, this economic process includes several key features. Moreover, they are similar (with slight differences) for both open and hidden inflation. We briefly describe each of these two types.
The concept of
open inflation implies mainly an increase in prices (significant or insignificant) for goods and services. The closed type usually exists in a nonmarket economy.
For the first time this term was used as far back as 1861 by North American economists. Translated from Latin, the word inflatio means something like "swelling." So during the civil war, the process of the so-called swelling of commodity-money circulation was characterized.
Thus, the concept and essence of inflation can be considered open, albeit in general terms. It is important, however, in addition to learning about what are the causes of this phenomenon. There are many of them, and each time they may be different. In this case, we consider the most “influential” and obvious ones. So this is:
- budget deficit ;
- issue of money;
- excess of money supply over commodity;
- excessive wage growth;
- excess investment and uncontrolled investments.
It is important, among other things, to say that the causes of inflation can be both internal and external. The latter include, for example, too much public debt to other countries.
The concept of inflation, as well as its causes, is far from all that is necessary to know about this economic phenomenon. Interestingly, it can have a very different nature of the "course of the disease." Scientists-economists distinguish several main types (in addition to open and closed) inflation. It happens:
- galloping / hyperinflation / creeping;
- balanced / unbalanced;
- unexpected / expected;
- imported;
- another.
We also note that inflation is not a purely monetary phenomenon. It also affects the social sphere of society.
All these and other important issues are dealt with by one of the most important sciences - economics. Inflation, the concept of which was discussed above, has become one of the most pressing problems today. For the reason that it can be one of the factors of the onset of the economic crisis, scientists around the world are studying its premises and finding methods for its prevention.