{"id":3429,"date":"2023-10-05T09:03:25","date_gmt":"2023-10-05T09:03:25","guid":{"rendered":"http:\/\/localhost\/ecole9ja\/?p=3429"},"modified":"2023-10-05T09:05:02","modified_gmt":"2023-10-05T09:05:02","slug":"week-3-ss2-third-term-economics-notes","status":"publish","type":"post","link":"https:\/\/ecolebooks.com\/nigeria\/posts\/week-3-ss2-third-term-economics-notes\/","title":{"rendered":"Week 3 – SS2 Third Term Economics Notes"},"content":{"rendered":"

WEEK THREE
\n<\/strong>INFLATION
\n<\/strong>CONTENT
\n<\/strong><\/p>\n

    \n
  1. \n
    Meaning, Types, Causes of Inflation\n<\/div>\n<\/li>\n
  2. \n
    Effects and Controls\n<\/div>\n<\/li>\n
  3. \n
    Deflation, Meaning and Causes\n<\/div>\n<\/li>\n
  4. \n
    Effects and Controls\n<\/div>\n<\/li>\n
  5. \n
    Terminologies Associated with Inflation\n<\/div>\n

    \u00a0DEFINITION
    \n<\/strong><\/li>\n<\/ol>\n

    Inflation-<\/strong> is a persistent rise in the general level of price of goods and services. Inflation occurs when there is an increase in money supply without corresponding increase in volume of
    \nproduction.<\/p>\n

    \u00a0TYPES OF INFLATION
    \n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Demand \u2013 Pull Inflation
    \n2.\u00a0\u00a0\u00a0\u00a0Cost \u2013 Push Inflation
    \n3.\u00a0\u00a0\u00a0\u00a0Hyper-Inflation
    \n4.\u00a0\u00a0\u00a0\u00a0Creeping Inflation<\/p>\n

    \u00a0Demand \u2013 Pull Inflation<\/strong> \u2013 This occurs when there is excess demand for goods and services over the supply. The factors responsible for this type of inflation may be due to population increase, increase in workers’ salaries and wages, etc.<\/p>\n

    \u00a0Cost \u2013 push Inflation<\/strong> \u2013 Producers pay for factors of production, any slight increase in price of factor input will reflect in the price per unit. For example: if there is an increase in price of flour, sugar, butter, automatically the price of bread would be high.<\/p>\n

    \u00a0Hyper- Inflation<\/strong> \u2013 This occurs when the prices of goods and services are rising fast to
    \nthe extent that money is losing its value or its ability to buy goods. War, budget deficits,
    \netc are the major causes of hyper inflation. Hyper inflation is also known as \u2013 galloping
    \ninflation or run away inflation.<\/p>\n

    \u00a0Creeping Inflation<\/strong> \u2013 This type of inflation occurs when there is slow but steady rise in
    \nthe general prices of goods and services. It is also known as persistent inflation<\/p>\n

    \u00a0EVALUATION
    \n<\/strong><\/p>\n

      \n
    1. \n
      What is inflation?\n<\/div>\n<\/li>\n
    2. \n
      Mention four types of inflation you know.\n<\/div>\n<\/li>\n<\/ol>\n

      \u00a0CAUSES OF INFLATION
      \n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Inflation occurs when there is excess demand for goods and services e.g. demand pull inflation.
      \n2.\u00a0\u00a0\u00a0\u00a0Low productivity e.g. agriculture;
      \n3.\u00a0\u00a0\u00a0\u00a0Increase in salaries and wages.
      \n4.\u00a0\u00a0\u00a0\u00a0High cost of production.
      \n5.\u00a0\u00a0\u00a0\u00a0Budget deficit i.e. when government expenditure is more than its income.
      \n6.\u00a0\u00a0\u00a0\u00a0Inflation can also be caused if there is increase in population that will force demand to rise.
      \n7.\u00a0\u00a0\u00a0\u00a0Excessive bank lending.
      \n8.\u00a0\u00a0\u00a0\u00a0High cost of importing raw material can lead to high cost of goods.
      \n9.\u00a0\u00a0\u00a0\u00a0Hoarding \u2013 which is an act of creating artificial scarcity.
      \n10.\u00a0\u00a0\u00a0\u00a0Inflation can be caused due to industrial action by workers e.g. strike, tools down etc.
      \n11.\u00a0\u00a0\u00a0\u00a0Poor storage facilities.
      \n12.\u00a0\u00a0\u00a0\u00a0Money laundering \u2013 which is mass transfer and injection of money into circulation.<\/p>\n

      \u00a0EFFECTS OF INFLATION
      \n<\/strong>Inflation as a phenomenon is a necessary evil. In other word, it has positive and negative
      \neffects in the overall economy.<\/p>\n

      \u00a0POSITIVE EFFECTS OF INFLATION
      \n<\/strong>1.\u00a0\u00a0\u00a0\u00a0During inflation, the debtor gains at the expense of the creditor.
      \n2.\u00a0\u00a0\u00a0\u00a0Inflation period serves as a period where businessmen make profit.
      \n3.\u00a0\u00a0\u00a0\u00a0Inflation stimulates investment.
      \n4.\u00a0\u00a0\u00a0\u00a0Employment rate is high during inflation.
      \n5.\u00a0\u00a0\u00a0\u00a0Due to the second, third and fourth points stated above, inflation helps the economy to grow.<\/p>\n

      \u00a0Negative effects of inflation
      \n<\/strong>1.\u00a0\u00a0\u00a0\u00a0The lenders (creditors) incur loss because the money loses its value as inflation persists.
      \n2.\u00a0\u00a0\u00a0\u00a0Distortion in the economy due to agitation for increase in wages and salaries.
      \n3.\u00a0\u00a0\u00a0\u00a0Fixed income earners e.g. salary earners suffer a lot during inflation.
      \n4.\u00a0\u00a0\u00a0\u00a0Money loses its value during inflation.
      \n5.\u00a0\u00a0\u00a0\u00a0It leads to balance of payment problems.
      \n6.\u00a0\u00a0\u00a0\u00a0Inflation discourages savings since money loses its value day in day out.
      \n7.\u00a0\u00a0\u00a0\u00a0Fall in living standard of the people.<\/p>\n

      \u00a0EVALUATION
      \n<\/strong>1. State four positive effects of inflation.
      \n2.\u00a0\u00a0\u00a0\u00a0State five causes of inflation<\/p>\n

      \u00a0HOW TO CONTROL INFLATION
      \n<\/strong>1.\u00a0\u00a0\u00a0\u00a0In an attempt to stem inflation, the government should encourage industrialization to make goods and services available.
      \n2.\u00a0\u00a0\u00a0\u00a0Where inflation is triggered by increase in money supply, effective interest rate could be adopted i.e. increasing the interest rate to discourage excess borrowing.
      \n3.\u00a0\u00a0\u00a0\u00a0Effective use of fiscal policy e.g. Taxation as a way of reducing the disposable income of workers can help to check inflation.
      \n4.\u00a0\u00a0\u00a0\u00a0Removal of bottlenecks in the distribution system. This will enhance free flow of goods.
      \n5.\u00a0\u00a0\u00a0\u00a0Legislation could be put in place to check the activities of hoarders.
      \n6.\u00a0\u00a0\u00a0\u00a0Contractionary monetary policy can also help to check inflation where inflation is caused by increase in money supply.
      \n7.\u00a0\u00a0\u00a0\u00a0Subsidies \u2013 for farmers, business, will help in solving the problem of increase in the prices of inputs e.g. hoe, cutlass.
      \n8.\u00a0\u00a0\u00a0\u00a0Wage freezing i.e. government should not increase salaries.<\/p>\n

      \u00a0EVALUATION
      \n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Describe the effects of inflation on the economy of a country.
      \n2.\u00a0\u00a0\u00a0\u00a0What efforts has the government of Nigeria made to combat inflation?<\/p>\n

      \u00a0TERMINOLOGIES ASSOCIATED WITH INFLATION
      \n<\/strong>1.\u00a0\u00a0\u00a0\u00a0INFLATION GAP<\/strong> \u2013 This is an economic situation in which the total demand in the economy exceeds the total supply of goods and services available to satisfy demand. To arrive at this, subtract the total amount of money available for spending from the total money value of the actual good and services available to meet the demand.
      \n2.\u00a0\u00a0\u00a0\u00a0INFLATION SPIRAL<\/strong> \u2013 An increase in price will make workers to demand for an increase income (wages and salaries). This will cause a rise in general level of price. This is known as inflation spiral.
      \n3.\u00a0\u00a0\u00a0\u00a0DISINFLATION<\/strong> \u2013 The direct control of consumer’s expenditure as a way of checking inflation is known as disinflation. This is done by reducing the supply of money and increasing interest rates etc.
      \n4.\u00a0\u00a0\u00a0\u00a0REFLATION<\/strong> \u2013 This refers to economic state of affairs in which prices, employment, output etc. is picking up again as a result of conscious government policy to that effect.
      \n5.\u00a0\u00a0\u00a0\u00a0STAGFLATION<\/strong> \u2013 When high rate of inflation exists at the same time as industrial production is slowing down, then we refer to this as stagflation.
      \n6.\u00a0\u00a0\u00a0\u00a0SLUMPFLATION:<\/strong> Slumpflation occurs when economic condition in which much reduced economic activity co-exists with inflation.<\/p>\n

      \u00a0DEFLATION<\/strong>– is defined as a persistent fall in the general level of price. This is a
      \nsituation where the volume of money in circulation is not sufficient to meet up with the
      \nprevalent economic situation. This is a direct opposite of inflation. This is a fall in
      \ngeneral level of price as a result of decrease in the volume of money in circulation.<\/p>\n

      \u00a0CAUSES OF DEFLATION
      \n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Deflation is caused by failure of government to spend i.e. Budget surplus.
      \n2.\u00a0\u00a0\u00a0\u00a0When banks increase their interest rate, it discourages borrowing as such money supply drops. This amounts to deflation.
      \n3.\u00a0\u00a0\u00a0\u00a0Where the productivity exceeds the demand coupled with decrease in money supply then deflation sets in.
      \n4.\u00a0\u00a0\u00a0\u00a0Where workers are excessively taxed leaving them with little disposable income, their marginal propensity to consume drops thereby leading to deflation.<\/p>\n

      \u00a0EVALUATION
      \n<\/strong>1.\u00a0\u00a0\u00a0\u00a0Write a short note on; (a) inflation gap (b) stagflation (c) deflation
      \n2.\u00a0\u00a0\u00a0\u00a0State four causes of deflation.
      \n\t\t<\/strong>
      \n\u00a0READING ASSIGNMENT
      \n<\/strong>Amplified and Simplified Economics for SSS by Femi Longe page 196-204<\/p>\n

      \u00a0GENERAL EVALUATION QUESTIONS
      \n<\/strong><\/p>\n

        \n
      1. Define the term limited liability.\n<\/li>\n
      2. Explain the term external economies of scale\n<\/li>\n
      3. Outline any four features of scale a firm enjoys as it grows in size.\n<\/li>\n
      4. Distinguish between a cheque and a bank note.\n<\/li>\n
      5. \n
        What is public recurrent expenditure?\n<\/div>\n

        \u00a0<\/li>\n<\/ol>\n

        WEEKEND ASSIGNMENT<\/strong>
        \n\t1.\u00a0\u00a0\u00a0\u00a0An inflation in which the price level rises steadily at an average rate of about 2% per annum is best described as (a) galloping (b) induced\u00a0\u00a0\u00a0\u00a0(c) creeping (d) suppressed (e) run-away
        \n2.\u00a0\u00a0\u00a0\u00a0Inflation in any economy_____ (a) has no monetary connection (b) implies a sustained decrease in the general price (c) always increase the value of the national currency
        \n\u00a0\u00a0\u00a0\u00a0(d) tends to redistribute income (e) tends to bring down market prices
        \n3.\u00a0\u00a0\u00a0\u00a0Which of the following statements is not true in an inflation period. (a) the purchasing power of money diminishes (b) wages rise simultaneously with price (c) more money runs after a limited quantity of goods (d) fixed income earners lose (e) aggregate real demand exceeds aggregate real supply.
        \n4.\u00a0\u00a0\u00a0\u00a0Inflation caused by an increase in demand is known as ___________
        \n\u00a0\u00a0\u00a0\u00a0(a) cost \u2013 push inflation\u00a0\u00a0\u00a0\u00a0 (b) hyper-inflation (c) demand- pull inflation
        \n(d) creeping inflation (e) runaway inflation
        \n5.\u00a0\u00a0\u00a0\u00a0One way to solve the economic problem of inflation in a country is by increasing the (a) supply of commodities (b) supply of currency\u00a0\u00a0\u00a0\u00a0(c) salaries of workers
        \n\u00a0\u00a0\u00a0\u00a0(d) demand for commodities
        \nTHEORY
        \n<\/strong>1.\u00a0\u00a0\u00a0\u00a0What is inflation? Discuss four ways of combating inflation.
        \n2.\u00a0\u00a0\u00a0\u00a0State three positive effects and two negative effects of inflation.<\/p>\n","protected":false},"excerpt":{"rendered":"

        WEEK THREE INFLATION CONTENT Meaning, Types, Causes of Inflation Effects and Controls Deflation, Meaning and…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,272],"tags":[],"class_list":["post-3429","post","type-post","status-publish","format-standard","hentry","category-posts","category-third-term-ss2-economics"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/3429","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/comments?post=3429"}],"version-history":[{"count":1,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/3429\/revisions"}],"predecessor-version":[{"id":3430,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/3429\/revisions\/3430"}],"wp:attachment":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/media?parent=3429"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/categories?post=3429"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/tags?post=3429"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}