1 Theoretical foundations of inflation

1.1 Relationship of Finance and inflation.

Finance and inflation linked. How finance can be an accelerator of inflation and inflation affects financial relationships. Providing money and higher prices leads to an increase in budget expenditures of the tax burden , increase in public debt caused by the state budget deficit . High inflation devalues ​​the financial resources of the state , as tax revenues and loans come at regular intervals , so worthless . Similarly, an increasing problem of public debt as borrowing for the state is forced to raise the profitability of their securities above the level of loan interest than is the nominal growth of public debt. Unidirectional, negative financial relations and inflationary processes , complementing leads to negative results in the economic system . Similarly, the positive direction of financial relations reduces the rate of inflation , as well as low inflation or lack of improved financial performance at various levels of the national economy . Relationship of finance and inflation can be traced to the two types of inflation : demand-pull inflation and cost-push inflation . In the first case it is a consequence of increased demand for products, goods and services in connection with increasing the money supply from entities at a constant or decreasing volume production. In the second case, inflation causes a rise in the cost of managing subjects of labor , to increase interest rates , increase in prices of raw materials consumed , material , service tariffs . Inflation occurs when not mature enough , and in some industries there is no mechanisms of the market economy - competition and bankruptcy of inefficient enterprises . In general, the principles of inflation are contradictions in basic relationship imbalances and the crisis of the economy, its inability to self-development , low efficiency of social production . Form of manifestation of inflation , providing money and a corresponding fall in their purchasing power , expressed in prices for products , goods and services . Nature inflation lies in the ability of money to carry out relatively detached from the movement which they express the mass of commodities . This property is money , which is the basis of their operation , allowing them to effectively serve its purpose - serving the trade , payment transactions , serve as a means of accumulation and cost savings . Classic source of inflation - the government deficit - is also typical for Kazakhstan , although the budget deficit is a secondary factor in inflation because inflation is caused by costs and , therefore , provision of government revenue. Cover the deficit issue of money leads to ensure their inflation and inflation in these processes and the budget deficit reinforce each forming a closed causal regularity. An additional factor of inflation was the order of reference interest loans used on production costs , in the face of rising fees for the loan it has led to a sharp increase in the cost of production , and behind her , and prices. Can be considered a factor of inflation growth in social aspirations of the population in conditions of rising prices , especially of individual professional and social groups.