CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Inflation can be defined as the persistence rise an prices of goods and service due to the volume of money in circulation. This is an increase in the money and credit relative to available goods and service resulting in a general price level. In order to observe that there is inflation there should be a rise in the volume of money credit. This rise must exceed the available goods and service an the country. There should a the substantial and centurial increase in the gene price level of goods and services.
Rise in prices may be of various magnitudes accordingly different names have been given to inflation depending upon the rate of rise in prices .if the prices of goods and service rise this in just saying that the value of money has fallen because less goods and service can now be obtained in exchange for a given sum of money. Prices vary inversely with the value of money. The value of money is this shown by the level of prices a general fall in process indicates rise on the value of money. The price of a commodity is the amount of money that has to be paid for it. The value of money is the quality of goods and service it will buy. The market price is the indicator of relative value of goods and service in terms of money.
1.2 STATEMENT OF PROBLEM
Despite the fact that inflation increase investment which creates employment of production resources and hence greater output there are indications that discourager savings thereby increasing the risk of holding raw each and reducing the value of money inflation will lead to a fall in the burden of national debt by making a fixed debt amount to lose its purchasing power.
During inflationary periods the value of money which is the purchasing power of money Falls inflation increase the earnings of business share holders and other whose income are fixed in money terms but inspite of these there are complained that it reduced the standard of living of the people whose income are fixed thus increasing their cost of education welfare and culture facilities available. This situation however makes it difficult for the poor masses with fixed income difficult to survive in the economy.
Inflation will also lead to a balance of payment deficit. The rise in the prices of home goods will make more consumer goods to be imported thereby making the county to spend more foreign currency that what it will received abroad from exportation. However since the real value of money fall during inflationary period people prefer to spend it rather than investment. Also debtors gain while creditors lose because the burden of debt falls and the money loses its purchasing power.
1.3 OBJECTIVE OF THE STUDY
The study embraces the causes consequences and control of inflation in the Nigerian economy. The negative effective of inflation has indeed remained a stagnant towards the economic development. However the main objective of the study are as follows:
To fund out the causes of inflation in the Nigerian economy.
To known its influence on the Nigeria economy
To determine to a great extent how inflation affect an economy
To fund out the means and provide possible solution that can be adopted in solving the problems of inflation in the Nigerian economy
The study will also educate the masses on the need to minimize the problem associated with inflation in a bid to have an economic boom instead of doom.
To give suggestions on how to curbs inflation through governmental agencies and individual