Over the last century many countries throughout the world have experienced.
inflation as their major economic problem. Expensive wars have traditionally been.
recognized as the sources of inflation. Governments, in effort to squeeze more production.
out of an economy, have often resorted to printing or releasing more money to finance the.
purchase of arms and soldiers1. In an economy already producing at full capacity, the.
issuing of additional money serves to bid up the prices of the output of the economy,.
resulting in inflation. It was generally assumed from past experience, that once the.
economy returned to its normal state, the persistent tendency for overall prices to rise.
would disappear, bringing inflation rates back to normal. World War II brought the.
persistent inflation that economists came to expect. In the 50's and early 60's inflation.
resumed to very low rates concomitant with large growth increases and low.
unemployment. But, from 1967 to 1974 the rates of inflation reached alarming proportions.
in many countries, such as Japan and Britain, for no apparent reason. This acceleration in.
inflation has forced many economists to reevaluate their views, and often align themselves.
with a specific school of thought regarding the causes and cures for inflation. .
There are two opposite theories regarding inflation. Monetarism indicates that.
inflation is due to increases in the supply of money. The classic example of this.
relationship is the inflation that followed an inflow of gold and silver into Europe, resulting.
from the Spanish conquest of the Americas. According to monetarists, the only way to.
cure inflation is by government action to reduce growth of the money supply. .
At the other end is the cost-push theory. Cost-pushers believe that the source of.
inflation is the rate of wage increases. They believe that wage increases are independent of.
all economic factors, and generally are determined by workers and trade unions.
"Inflation that is higher than expected benefits debtors. Inflation that is lower than expected benefits creditors."... Inflation was first noticed after the adoption of capitalism. ... The law of demand dictates this cause of inflation. ... While it is true that actual inflation normally does not stray far from anticipated inflation, an unanticipated inflation causes a loss to creditors that can"t be avoided. ...
These are inflation, deflation, hyperinflation and stagflation. Inflation can be a good thing or a bad thing, in a good economy with low employment it is good to have inflation, but when there is bad unemployment inflation is a bad thing because people do not have or earn enough money to keep up with changing prices. ... When there is inflation the value of a dollar never stays constant. ... Inflation in effect wipes out your purchasing power. ... Stagflation ("The Simultaneous occurrence of substantial unemployment and inflation")(Schiller p.327) In theory inflation and unemployment move in o...
Inflation is defined as a sustained rise in the general price level. When the inflation figures' come out once a month and are quoted on the news, the newsreaders give certain percentage rates of inflation'. ... This is much harder when inflation is high. High inflation tends to coincide with variable inflation and, therefore, very unstable prices. Unanticipated inflation causes uncertainty. ...
Inflation occurs when there is a sustained increase in the general level of prices. ... Inflation can cause a number of problems for an economy, so it can be said that there are costs of inflation. ... Inflation can cause a redistribution of wealth from savers to borrowers, because the real value of debts (the nominal value minus the inflation rate) is falling. ... Finally, inflation can cause problems if a country has higher inflation than overseas, as industry becomes less competitive and export markets suffer. ... This means that a rise in the money supply doesn't always cause infla...
What is inflation? ... Hence, inflation is not easy to define in practice. This should be kept in mind when discussing how to defeat inflation. ... Some say that inflation is not only expected, but also often, needed. ... There are even examples of inflation declining while the economy booms. ...
The answer is inflation. ... When this happens we may get demand-pull inflation or cost-push inflation. ... There are four other types of inflation that I will talk about and those are anticipated inflation, unanticipated inflation, stagflation, and hyperinflation. When we are expecting inflation to occur, we have anticipated inflation. ... The next type of inflation is unanticipated inflation. ...
Inflation can be divided into cost-push inflation and demand-pull inflation. Cost-push inflation is defined as "inflation whose initial cause is a rise in production costs". ... Inflation expectations can also cause inflation. ... Not every one suffers from the inflation. ... Today the market interest rates reflect inflation and inflation expectations. ...
Generally, a moderate rate of inflation has been the ultimate goal. ... So too does the belief that inflation originates in the labor market. ... Are there real long-term benefits to low, or zero, inflation? What are the real effects of low inflation? ... This implies that in the short-run, nominal wage rise will not fully absorb the actual inflation, and as such, there is scope for reducing unemployment through inflation. ...
