Inflation
Inflation is a process of raising price with generally and continually related with market mechanism that can cause by some factors, which are ,raising of society consumption or there is unfluency goods distribution. Inflation also process of decreasing currency with continually. The term of inflation also use to determined increasing money stock that cause raising of good price.
There are two causes of inflation which are, demand pull inflation and cost push inflation. Demand pull inflation can happen because there is over total demand that change price level. Increasing the demand to level of price is affect to the production factor.Increasing the demand to the production factors will be affect to the increasing price of production factors. So, this inflation happen because raising in total of demand when economy situation in full employment. And Cost pull inflation happen because of raising in production cost and affect to the price of products that produce. Increasing the cost of production two cases , which are increasing of price,for example raw materials and increasing of salary,for example incrasing salary of civil servant will be affect private enterprise will raised the good price.
Inflation also classified into three, which are , based on the originality,the amount of coverage in price,based on the level of inflation. Based on the originality is divide into two,which are, domestic inflation and international inflation. And from the amount of coverage in price , this is divide into 3, the first is closed inflation ,close inflation and hyperinflation. And then, based on the level of inflation. This is divide into, mild inflation (less than 10 % per year),medium inflation (between 10 % till 30% per year),severe inflation (between 30% till 100% per year),and the last is hyperinflation(more than 100%).
Inflation can be measured by counting the changing level of percentages price index. The price index which are , Consumer price index(CPI) is index that measure average cost of particular goods bought by the consumer.And then cost of-living-index (COLI).And producer price index is index that measured the average cost of goods that needed by producer to do the production process. Comodity price index is index that measured price from particular commodities .Price index of capital goods. And the last is PDB Deflator that show level of price change from new goods,locally production goods ,finished good and service.
For the society that has fixed income, inflation is very harm.Inflation also affect to the people does not want to save their money because thev currency is decreasing.If the people does not want save their money, investation world will be hard to develop.Because, to developed the enterpreneurs world it need financial from bank that gain from the society.
For producer ,inflation can give advantages if the income higher than increasing of production cost. If it is happen producer will be pushed to increase the production.But, generally effect of inflation are,decreasing of investation in country,increasing interest rate,push capital plan speculatifly,failure of the development,unstable economy,decreasing of society life and society welfare and deficit of the balance sheet.