Chapter 1. Theoretical foundations of finance.

INTRODUCTION

Inflation is a sustained increase in the average price of all goods and services produced in an economy. Money loses purchasing power during inflationary periods since each unit of currency buys progressively fewer goods. The study of money and how it is used. Finance considers the relationship of money to time and risk. One of the main subsets of finance is the study of credit and banking, as this involves money, time, and risk all together. Finance may deal with personal or corporate issues, such as how will an individual or company acquires the money needed to perform a certain act. The purpose of the course work is to examine such topics as finance and inflation in the Republic of Kazakhstan.

Main purpose is studying Interaction between finance and inflation

To achieve this goal following tasks were set:

- Identify interrelation and interaction of finance and Inflation

- Analyze inflation in Kazakhstan

- Describe the solutions to overcome the inflation in Kazakhstan

However, the definition of inflation as overflow channels of currency depreciating paper money cannot be considered complete. Inflation, though it manifests itself in the increase in commodity prices, cannot be reduced to a purely monetary phenomenon. In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services.

Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.

It is a complex social phenomenon, generated by imbalances of reproduction in different areas of the market economy. Inflation is one of the most acute problems of modern economic development. This is a complex social phenomenon caused by imbalances of reproduction in different areas of a market economy. Inflation is one of the most acute problems of modern development economics.

Summing up all these, in General, identical, definitions, we can say that the inflation is a monetary phenomenon, as a steady and continuous rise in prices caused by excess money supply. In other words, this problem occurs in situations when the petty cash of entrepreneurs and consumers (money supply) is greater than the real need (demand for money). It is obvious that in this case the subjects of economic relations will try to get rid of surplus money raised, increasing their expenditures and reducing money saving. This will cause expansion of demand, higher prices and reduced purchasing power of money-the negative consequences of incorrect monetary policy States, leading to considerable economic and social upheaval.

In General, the roots of the phenomenon of inflation, always lie in the mistakes of public policy. Causes may be a significant budget deficit, incorrect actions on monetary emission and more individually and collectively.

However, inflation, though it manifests itself in the growth of commodity prices, cannot be reduced to a purely monetary phenomenon. This is a complex socio-economic phenomenon caused by imbalances of reproduction in different areas of a market economy. Inflation, having a long and rich history, and now constitutes one of the most pressing problems of the modern development of the economy in many countries of the world.

In today's world there are many issues which we justly call the modem it global. Inflation is one of them. It has existed since the times of the economic development of the whole of humanity, but has relatively recently, hitting at once all economies: developed and developing. All progressive mankind's economic thought, put a lot of effort to fight it, but inflation finally defeated was not because there were new and more complex forms.

CHAPTER 1. THEORETICAL FOUNDATIONS OF FINANCE.

Дата добавления: 2015-10-31