Ramadan Month caused Inflation in Indonesia
As a … we have to know about macroeconomy to understand about our country’s economy. Macroeconomy is study about economy as a whole. It shows to explain the changes of economic, economic growth and inflation rate in a country. The activity in an economy is determined by the interaction of aggregate demand and aggregate supply.
Aggregate demand is the total spending on an economy’s goods and services at a given price level in a given time period. There are 4 components in Aggregate Demand, which are:
Consumption (C): In economics, consumptions also known as consumer expenditure. It consists of spending by households on goods and services.
Investment (I): Spending by private sector firms on capital…show more content… They tend to spend their money to buy and saving in a form of goods such as gold, land, and buildings. These types of goods rise price as same as inflation.
There are two types of inflation. The first is cost push inflation, the inflation caused by rising costs. Cost push inflation occurs mainly as the impact of government policy. For example, the policy of reduction of energy subsidies by raising fuel prices. The increase in fuel prices led to rising production of costs.
The second is the demand pull inflation, inflation that caused by an increase in aggregate demand is not matched by the same increases in aggregate supply. This type of inflation will disrupt the balance of the market, called market equilibrium. The terms of equilibrium refers to a situation where there is no way for change or efficient. Increases in aggregate demand caused by a consumer boom, a rise in Government spending, and higher business confidence resulting in an increase in investment or increase in net…show more content… However, the demand-pull inflation problems is more harmless than cost-push inflation, because demand-pull inflation “associated with falling output”, although a rise in demand will have a greater impact on the price level and comes to full capacity. But, the inflation rate is high, it's more likely to cause more damage than a low rate, because it might leads to hyperinflation.
For this case, the inflation of Ramadan can be controlled. The demand for goods and food increased since the meal ahead of Ramadan until at least ten days after Idul Fitri holiday. After the Idul Fitri holiday, all the goods will disinflation, which means a fall in the inflation rate are slow in price but do not reduce the price.
If the increase occurs only once even though the presentation is not large enough yet can be said as inflation because it has no further influence, such as arise in prices ahead of Ramadan or on another big day it has not been said to be inflation because it has no more influence. Events like these cases is termed in the price level and every event that tends to the rising price level is referred to as the unpredictable