Inflation is an issue of concern to almost every country of the world. According to Dimson, Marsh, & Staunton (2012), inflation could be identified as a rise in general price level that result to a decline in the purchasing power of a country’s currency. …
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The case with the nation of the United States is not in any case different. Recent report from U.S. Bureau of Labor Statistics reported in less than a month ago that the price index for all items has increased by 1.4 percent over the first twelve months (USDL, 2012). This could be an indication that inflation rates have increased in the United States. However, as the following chat indicates the increase in inflation has not increased in a rate that would affect the economy.
The CFI-U chat above shows only a very slight upward shift on the consumer price index during the period suggested by the report. This period is subsequently followed by a period of lower CFI-U as indicated by the chat. The lowering of CFI-U indicated by the chat show that inflation rate in the United States has been decreasing since July this year. Moreover, the raise in CFI-U is very slight thus indicating that the increase in inflation during that period was insignificant. The current consumer price index is lower than the one that was reported five years ago. This indicates a significant decline in the inflation rates in this country.
Inflation in a country is mainly caused by economic activities and the volatility of the economy. One reason why United States has been able to reduce inflation is that it has been able to reduce the volatility of its economy. Another reason is that it has been able to increase the economic activities undertaken on its economy. All this has been done through adapting an effective monetary and fiscal policy. Fiscal and monetary policies have been identified as the most essential tools of solving economic problems. In solving economic problems, the two policies help to reduce the inflation rates in an economy. Moreover, they help to sustain low inflation rates in an economy despite the external factors that might try to increase the inflation rates. According to Yang & Traum (2010), the fiscal policy adapted by the United States focuses on adjusting government spending and tax rate. Increase in government spending has several effects to this country’s citizens. Among these effects is the increase in the commitment of the government in the provision of essential services. This raises the standards of living of individuals in this country thus resulting to economic growth. Lowering tax on the other had stimulates economic activities in a nation. United States has been maintaining a low tax rates in its economy thus raising the aggregate demand and expenditure in its economy. The raised aggregate demand and expenditure stimulates the economic activities thus resulting to economic growth. The economic growth has been enabling this nation to lower its inflation rates and sustaining the low levels of inflation. United States has been maintaining low interest rates on its economy. This is mainly aimed at reducing the supply of money. As a result, it could be categorized as a contradictory monetary policy (Dwivedi, 2010). The policy plays a very significant role in raising the price of this country’s currency. This assists in reducing the inflations rates in the economy of the United States. However, in an attempt to overcome unexpected increases in inflation, the monetary authority in this country is forced to introduce expansionary monetary policy in the economy. Expansionary monetary policy is one that focuses on increasing the supply of
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(Inflation in the United States Research Paper Example | Topics and Well Written Essays - 750 Words)
“Inflation in the United States Research Paper Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/macro-microeconomics/1456981-current-events-paper.
Initially, the considerable differences regarding political and bureaucratic cultures of U.S. and Ukraine were largely responsible for delay in the establishment of cordial relationships between the two countries. However, most of these obstacles still hinder the development of complete political and economic relationships between the United States and Ukraine.
United States Economy
We are going to look at the industries that have become additionally important in the United State economy and how the government is taking over the share of the nation’s output. The growth of people’s income, the distribution of people’s income among many more will be addressed.
Simply put, inflation refers to the rise in the prices of goods and services in a given economy for a given period of time. When such a thing happens, it therefore means that each unit of currency in that particular economy buys fewer goods than what it could have purchased initially before the inflation.
There are different economic variables that affect the lives of people. One of those variables is inflation. Inflation can be defined as a persistent substantial rise in the general levels of prices (Dictionary).
Unfortunately this is not the case since there are millions of Americans suffering of poverty and hunger. The U.S. government is mainly responsible for poverty in America. The government protects the interest of the wealthy and rich, while at the same time cutting the budgets of social programs geared towards improving the standard of living of the poor.
In principle, we know that we are in a recession when there is a general decline in the economic activity. This becomes obvious when we look at the real gross domestic product. This is the most viable indicator to know the state of the economy. This is regarded as a noteworthy turn down in economic activity just after the economy reaches a peak and end when it reach trough (New York Times, 2010).
Income and employment outcomes for most people are largely influenced not just by individual aspects such as job experiences and educational degree, but also by the privileges and resources of the sector they belong to, such as families, communities, and countries.
Health care is rendered by various distinguished legal bodies. According to Peterson and Burton (2008) health care facilities in United States of America is largely operated and owned by the private segment. Health insurance in the public sector is chiefly offered by the government.
This threshold as defined by the US government is adjusted for inflation, which is done by using the CPI, or consumer price index. The Us government uses total received income in defining the poor with poverty levels in 2012; for instance, set at an annual income of $23,050 for families with four members.
Companies in turn increase the prices of goods and services to maintain their profit margins. On the other hand, the employees expect higher wages to keep up with the high cost of living. All these are known to be the effects of inflation and if no action is taken, the economy is likely to be adversely affected.
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