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INFLATION of MALAYSIA

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Loh Wai Keong

on 19 July 2014

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Transcript of INFLATION of MALAYSIA

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
Contents
1.0 Introduction

2.0 Example Cases Happen in Malaysia

3.0 Causes of Inflation

4.0 Effects of Inflation

5.0 Ways to Reduce Inflation

6.0 Conclusion
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
in
Malaysia
Asian financial crisis
The value of ringgit devaluated
Inflation rate increases from 2.7% to 5.3%

Year 2008
Oil price shock
International high price of crude oil
Government cannot stand the
subsidies increase
Fuel price increase
Lowering the purchasing power
Year 1997
Year 2012
Minimum wage policy
Employers spend more in hiring an
employee
Cost of production increase
Various types of control
Producers hiding the stock
Causes of
Inflation
-
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
WAYS TO
REDUCE INFLATION
Monetary Policy
Fiscal Policy
Monetary policy
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.

FISCAL POLICY
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
conclusion
-
Local traders must be more competitive

- Do not simply increase the prices to gain higher profit

- Follow the policies implemented by government
THANK YOU !
Full transcript