Name: Course: Tutor: Date: Inflation Introduction Inflation is a scenario whereby the trend of goods and services in an economy rises rapidly. Such a situation occurs when there is excessive money in circulation. This essay will focus on the various types of inflation, their causes, and their measurements…
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It is important to note that, the higher demand will in turn pull up prices of commodities thus resulting to too much money circulating in an economy. This can be attributed in times of war, or rather political crisis in a country's economy. Pricing Power Inflation This also referred to as profit-push inflation. This is a type of inflation, which result from a situation whereby, individuals in business intentionally and administratively decide to increase the prices of commodities and services. This intentional move aims at increasing the profit margins. The makers exercise their market influence by increasing the prices of product and services to suit their expectations. It occurs in monopolies and oligopolies market. They do this due to their concentration in the market. Cost- Push Inflation This occurs when the price of goods or service increase due to the rising cost of its production or when the maintenance cost rises. It is apparent that the resultant excess demand created by the rising cost of production causes prices to increase. An example is whereby price of an agricultural product such as maize rises due to an increase in the cost of fertilizer production. Wage-push inflation This normally occurs when wages or labor costs rises due the influence from the labor union’s demand for the increase in wages. In addition, as it happens, the productivity remains constant. The resultant cost and effect will drift to the consumers. The increase in the cost of labor will cause the business to cut down the number of laborers hence consequently resulting to the low productivity. On the other hand, the fall in productivity level, which is low supply, will cause prices to rise due to the constant consistency of the demand. This inflation causes unemployment since higher price level means that, no more laborers are needed. In this scenario, most institutions lay off some of the employees. Unless demand for the wage stops, there will be continuous, high price level coupled with higher unemployment and low output. Sectoral Inflation This kind of inflation occurs on the relationship between related or unrelated product and or services. This occurs when change in the price of a product influences the price of another. For example, a stationery user, a case, or a situation whereby the price of timber price rises, the stationery dealer will in turn increase the price of stationery items such as books to suit their profit margin thus causing a general increase in prices occurring in every unit of product or service. Supply shock inflation This arises under unpredictable circumstances in an economy, for example, when there is unpredictable drought occurrence, the price of the agricultural products will rise rapidly and especially when there is no enough stock to curb and fix the situation. Hyper inflation It is a form of inflation that occurs when country involved is in economic backdrop thus in dire need of monetary valuables and funding. It is where prices rise at a higher rate, and when the rate of inflation exceeds four digits. Creeping inflation It occurs where price level rises normally between 1 and 7%. Imported inflation It deals with international trade. The prices of imported goods normally have an effect in domestic prices. Causes of inflation It is worth noting that inflation occurs under various circumstances for instance when there are changes in the price of foreign goods. This will have an impact on the overall payment made to the outsiders.
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“Types of Inflation, Causes and How Inflation Is Measured Essay”, n.d. https://studentshare.org/macro-microeconomics/1436883-types-of-inflation-causes-and-how-inflation-is.
It will also talk about the solutions and how the common people are affected because of inflation. Graphs will represent the changes in the rate of inflation for a period of 10 years. Introduction The development of the economy of Saudi Arabia occurred with the establishment and the expansion of the Saudi state in the past five decades.
China’s Inflation and related factors. This excerpt is from Dow Jones Newswires magazine. It considers the rise in inflation in China with connections to variations in GDP rate. The article even highlights the factors that are attributed to such rising inflation and GDP.
In the same way, it will provide an analysis into some of the effects of inflation while focusing on the different types of inflation arising from different economic situations. Introduction Inflation is described to be a rate in which the overall price of goods and services is increasing while the purchasing power decreases in an economy (Nicholson 57).
In effect, inflation is the loss or the diminishing of value of money in a given economy (Blanchard 45). In plain language, inflation is the instance where goods and services get expensive or the phenomena where people complain that the price of commodities is rising.
The effects of inflation can affect an economy in positive and negative ways or both positively and negatively simultaneously because it affects the differently. In many circumstances, there are different explanations that could be given to the rise of inflation in an economy and which could explain the reasons why a currency can lose its purchasing power as compared to different circumstance in market.
Businesses are reluctant to make investments during periods of volatile inflation. Countries suffer from a tax rate that is based on pre-inflationary periods that are less than the current value. It also causes exports to go down as prices go up resulting in a trading deficit.
This discussion concludes by outlining control measures necessary to manage inflation and the alternatives polices that can be taken by the government to manage inflation.
Inflation refers to increment of price levels in
Inflation refers to increment of price levels in general that is the rise in prices in not on individual commodities but in all areas over a period of time. It’s a change expressed in percentage and compared over
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