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Root Cause of Inflation

Root Cause of Inflation
Root Cause of Inflation

Iran has been struggling with double-digit inflation for more than four decades, during which economists have tried everything they knew to contain inflation, but to no avail. 
If we fail to identify the root of the problem, the solution would only compound the issue. For years, some economists prescribed medicine that was unrelated to the roots of inflation and failed to produce the desired result. Some people may ask how neighboring countries like Afghanistan register inflation rates lower than Iran’s, despite war and internal and external tensions and the fact that, unlike us, they don’t have oil. Morteza Afqeh, an economist and university professor, prefaced his write-up for the Persian monthly Ayandehnegar with this note. A translation of the text follows:
Inflation or the continuous increase in the general level of prices occurs when the supply-demand balance is disrupted and demand outweighs supply (production). Economics presents several reasons for the increase in demand compared to supply: inflation arising from demand pressure, inflation caused by the rise in production costs and inflation coming from the increase in money supply compared to the economic growth rate. As there are many causes of inflation in different times and countries, there are different ways to treat it.

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