Inflation has the ability to distort information in the market, namely relative prices. Unanticipated inflation creates misperceptions within individual markets that lead to increased prices. ... Deflation, like inflation, distorts information about the market. ... However, the risk to deflation is much greater when the inflation target is zero and can introduce the issue of downward wage rigidity. ... However, pushing the target down tends to lead to inefficiency in the market in the form of lost output and employment (Briault, 1995). ...

• Word Count: 1952
• Approx Pages: 8
• Grade Level: Undergraduate

This not only stimulates economic growth, but makes Australia more competitive on the global market. ... A major objective of fiscal policy is maintain internal balance, by creating jobs, keeping inflation within its target range and redistributing income in a fair manner. ... Despite Australia's inflation rate of 1.3%, well below the target range of 2-3%, falling below NAIRU could have a dramatic impact, affecting Australia's internal stability. ... To help finance the $158.6B spent on social welfare, the Government has targeted the superannuation of high income earners. ... While...

• Word Count: 1386
• Approx Pages: 6
• Grade Level: Undergraduate

With a market of more than a billion potential customers, a figure equivalent to one fifth of the world population who would disagree. ... The emergence of a financial market has also occurred due to globalisation, as China is looking much closer to a market economy. Financial markets are needed to control the money supply, with a reasonably tight fiscal policy and credit policy, this lead China to create a bond market, offering bonds with attractive interest rates to soak up excess money that threatened to fuel inflation. ... Such as worker's welfare beginning to deteriorate and the new ...

• Word Count: 2010
• Approx Pages: 8
• Grade Level: Undergraduate

It is important that governments ensure CPI's reflects actual market behavior thus giving accurate inflation percentage. ... What Prime Minister Shinzo Abe and the leaders he has placed at the Bank of Japan is encouraging inflation through, just to sum up, monetary and fiscal policy, to encourage economic growth, as well as a target with the Bank of Japan to target inflation at 2% together with Quantitative Easing methods-the excessive buying of bonds by the government. ...

• Word Count: 987
• Approx Pages: 4
• Grade Level: Undergraduate

MONETARY POLICY AND THE RESERVES MARKET The initial link between monetary policy and the economy occurs in the market for reserves. ... Therefore, to understand how monetary policy is related to the economy, one must first understand what the reserves market is and how it works. ... When the Federal Reserve buys securities in the open market, it creates reserves to pay for them, and the supply of non-borrowed reserves increases. ... Changes in the federal funds rate reflect the basic supply and demand conditions in the market for reserves. ... Equilibrium may be restored by open market operat...

• Word Count: 4049
• Approx Pages: 16
• Grade Level: Undergraduate