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INFLATION of MALAYSIA
Transcript of INFLATION of MALAYSIA
BUS 2384 Business Financial Environment
Lee Shi Sheng SCSJ-0017304
Loo Mu Ping SCSJ-0014431
Loo Mu Ling SCSJ-0014429
Chong Kylie SCSJ-0013331
Soh Mei Kuan SCSJ-0013191
designed by Péter Puklus for Prezi
2.0 Example Cases Happen in Malaysia
3.0 Causes of Inflation
4.0 Effects of Inflation
5.0 Ways to Reduce Inflation
What is Inflation ?
A rise in general level of prices of goods and services in an economy over a period of time. The level general prices arises, the currency of each unit to buy goods and services are fewer.
Examples Cases Happen
Asian financial crisis
The value of ringgit devaluated
Inflation rate increases from 2.7% to 5.3%
Oil price shock
International high price of crude oil
Government cannot stand the
Fuel price increase
Lowering the purchasing power
Minimum wage policy
Employers spend more in hiring an
Cost of production increase
Various types of control
Producers hiding the stock
Demand pull inflation
- Aggregate demand exceed available supply of output
- Cost-push inflation
- Rise in production cost
- Fall in the value of currencies or inflation in countries
- Price of electricity and gas raise
- Main cause in Malaysia is cost-push inflation
High price of crude oil cause fuel price to rise
- Oil producing country, engage in oil price control effort
- Price of local goods increase
- Value of ringgit turn down
- Minimum wage
- RM800 Sabah and Sarawak
- RM900 Peninsula
- Producers wage spend increase
- Government spending increases
EFFECTS of inflation
Low purchasing power of currency
Discourage investment and savings
Difficulties on making future plan
Affecting low-income group
Affecting creditors and debtors
Increase the interest rates reduce consumer spending:
Higher interest rates increase the cost of borrowing, discouraging consumers from borrowing and spending.
Higher interest rates make it more attractive to save money
Higher interest rates increased the value of the exchange rate leading to lower exports and more imports.
Implement surplus budget policies by increasing the taxes and reduce government spending:
to reduce consumers' disposable income
Minimize the cost of operation of government on welfare system
Local traders must be more competitive
- Do not simply increase the prices to gain higher profit
- Follow the policies implemented by government
THANK YOU !