In economics the term ‘inflation’ generally describes the prevailing annual rate at which the prices of goods and services are increasing. However, it is a common lace that all prices tend to rise at broadly the same rate…
Download file to see previous pages...
When prices of domestic goods and services are rising fast this will generally be true also of wages, of the prices of the imported goods, of the money supply and of the prices of assets. This is because inflation is one sector of the economy permeates rapidly into other sectors. The phrase “a high rate of inflation” therefore usually describes a situation in which the money values of all goods in an economy are rising at a fast rate . The view commonly taken is that inflation should be kept close to zero; prices should rise at no more than about 2 to 3 percent a year on average. This is because high inflation affects the economy adversely in a number of ways. For example, it distorts the income distribution; because of the difficulty and risk associated with the complete index-linking of pensions tend to suffer. Also, it biases investment decisions: the cost of borrowing money rises making debt finance expensive in the early years of a project and reducing the incentive to invest. In theory inflation accounting could correct for this, but in practice this has proved difficult to implement.
...Download file to see next pagesRead More
Cite this document
(“What, If Any, Is The Link Between Inflation And Output In Your Essay”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1538918-what-if-any-is-the-link-between-inflation-and-output-in-your-discussion-refer-to-both-theoretical-and-empirical-evidence
(What, If Any, Is The Link Between Inflation And Output In Your Essay)
“What, If Any, Is The Link Between Inflation And Output In Your Essay”, n.d. https://studentshare.org/macro-microeconomics/1538918-what-if-any-is-the-link-between-inflation-and-output-in-your-discussion-refer-to-both-theoretical-and-empirical-evidence.
When general prices of goods and services in a country rise, the value of money drops. This in return leads to inflation. Inflation then in the long run leads to the decrease of purchasing power of a currency. The occurrence of inflation has led to many central banks around the world to operate on a monetary policy regime of inflation targeting.
When an individual is introduced to drastic change of events, it may bring alterations on behaviour or biological processes of individuals to cause onset of disease. Chronic or long term stress has the capacity to expose an individual to develop illness because it causes permanent or prolonged psychological, biological, and behavioral reactions that facilitate development of illness (Despaus, 1999).
This depicts the huge nature of macroeconomics that makes it relatively difficult to study as a single subject. To this end, macroeconomics is studied using various variables of the collective economy. In the present study, the inflation rate of Canada is studied as one of the core macroeconomic variable of the country that helps in determining the macroeconomic status of Canada.
According to (Pinker, 2007:15) language can be learnt by any person with a healthy mind in the society and is passed down from generation to generation continually. Pinker goes on to say that thinking refers to a collection of both linguistic and non-linguistic processes.
Economists have found many divergent observations in their empirical analyses. There is a non-uniform evidence of the relationship between money supply, inflation and economic growth among countries. The pattern of relationship is uni-directional in some cases and bi-directional in others.
This paper has investigated no evidence that anything has altered around 1999. Episode nearby the euro cash changeover at the end of 2001 and in the opening of 2003 retail worth adjustment frequencies up and down and increased substantially. While the scale of the price adjustment also both up and down was less significant than otherwise.
But it was not possible to measure he amount of happiness so they changed its meaning and attach it with real income. Real income is money which is adjusted for the cost of living, also for the achieving things such as health, education and