StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Principles of Economics: Inflation - Article Example

Comments (0) Cite this document
Summary
Inflation has different components, phases, and forms. This article "Principles of Economics: Inflation" will aim at discussing the causes, effects, impacts, and importance of inflation in an economy. Additionally, the writer will mention the concept of deflation…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER93% of users find it useful

Extract of sample "Principles of Economics: Inflation"

Download file to see previous pages There are various causes of inflation which have been put forward by various economists. The first type of inflation is Cost-Push Inflation. This type of inflation occurs when firms respond to the increase in production costs, by increasing prices in order to retain their profit margins. When general costs increase the firms have few options on how to absorb the costs from within, this situation forces the organization to pass on this cost to the consumers.
The rise in prices may be triggered by several factors, these factors being an increase in the cost of imported raw materials. This may occur in countries which heavily rely on exports of such products. On the other hand, this may also occur by a fall in the rate of the pound in the international currency exchange a market that raises the UK price of imported products. An illustration of cost-push inflation occurred when British gas and alternative energy suppliers decided to increase the prices of gas and electricity. This strategy made energy-producing firms to charge different prices for the domestic and foreign markets during the period between the years 2005 and 2006.
The other cause associated with cost-push inflation is due to the increase in labor costs. When labor costs increase, the effects of this measure on company production is passed over to consumers.  This cause is significant in those firms and organizations which are labor-intensive. Some industries may opt against passing this high cost to the consumer since they might be able to cover the cost in other ways but in the long run they may be forced to increase prices of their products. The wage inflation often moves closely with price inflation; this is caused by the inability of the firm to absorb high operation costs in the long run. ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Principles of Economics: Inflation Article Example | Topics and Well Written Essays - 2750 words, n.d.)
Principles of Economics: Inflation Article Example | Topics and Well Written Essays - 2750 words. Retrieved from https://studentshare.org/macro-microeconomics/1571807-principles-of-economics
(Principles of Economics: Inflation Article Example | Topics and Well Written Essays - 2750 Words)
Principles of Economics: Inflation Article Example | Topics and Well Written Essays - 2750 Words. https://studentshare.org/macro-microeconomics/1571807-principles-of-economics.
“Principles of Economics: Inflation Article Example | Topics and Well Written Essays - 2750 Words”. https://studentshare.org/macro-microeconomics/1571807-principles-of-economics.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Principles of Economics: Inflation

Principles of Economics

...?Running Head: PRINCIPLES OF ECONOMICS Topic: Principles of Economics Lecturer: Presentation: Alcohol Abuse Economics is about scarcity and choice. It is assumed that all human beings are rational thinkers hence would always choose to consume products that would give them maximum satisfaction or utility. Mankiw (2011, p. 6) argues that rational people ‘systematically and purposefully do the best to achieve objectives given available opportunity.’ Given a choice among alternatives and with scarce resources, one would evaluate the benefits and costs of consuming an extra unit of a product and would only take a decision only if marginal benefit is greater than marginal cost. In this case, to solve the alcohol abuse problem, one has... Head:...
4 Pages(1000 words)Research Paper

Principles of Economics

...? Principles of Economics Assignment October 31 You own a local sub shop in a college town. You primarily servetwo groups of people: local residents (both students and other local residents) and visitors to your town. Devise a price discrimination strategy that will increase your revenues compared to a single-pricing strategy. The first order of business will be to identify the fast moving food items (fast movers) in our menu and the slow moving food items (slow movers). For the fast movers, visitors will pay 25 percent more than locals whereas for the slow movers visitors will pay 15 percent more than the locals. Locals pay less because the shop aims to develop deeper relationship with them and make them repeat customers. Our belief...
6 Pages(1500 words)Research Paper

Principles of Economics

...? Principles of Economics Alcohol consumption largely affects people’s living standards and its abuse has large external effects on others. Not only does its consumption affect negatively the consumer’s lifestyles, it also has implications on productivity of the labor market. Economists’ way of approaching this problem would be trying to establish costs brought about by alcoholism. The second approach would be trying to understand all costs involved into alcohol consumption. This is because alcoholism costs cannot be measured directly since a dollar cannot be easily placed on any loss of production. Such costs are estimated by use of statistical formulae in estimating the costs. It is not possible too to establish the pain and suffering...
3 Pages(750 words)Essay

Principles of Economics

... distribution and production of goods and services. Conclusion Economics principles are applied in daily activities. The economics of household benefits both business and households. The issue of alcohol abuse can be addressed through taxation. Another application of economics is in demand and supply of prescription drugs. Prescription drugs change the demand and supply of complimentary products and services and also substitute goods and services. Economics also deal with the issue of elasticity and cost responsibility of different products and production processes. Economics ensures that activities are done in a free market and thus ensuring effective and efficient allocation of resources. References Cook, P.J. & Moore, M.J. (2002...
4 Pages(1000 words)Essay

Principles of Economics

...? Principles of Economics Principle of Economics Current Economic Situation in the U.S. as Compared to Five Years Ago: InterestRates, Inflation and Unemployment The US economy is currently the largest globally with a GDP of approximately 15.08 trillion dollars (World Factbook, 2013). The economy is continually growing at a rate of 1.8 percent annually (World Factbook, 2013). The country is currently on its way to recovery from a recession although the present situation is better than it was in 2007 and 2008. The unemployment rate to date is estimated to be 9 percent which is high as compared to the recent past (World Factbook, 2013). The recession that began in 2007 was caused by the ‘sharp downturns’ in the housing, stock and labor...
4 Pages(1000 words)Essay

Principles of economics

Also called the transformation curve, the PPC's concept is used in macroeconomics to show the production possibilities available to a nation or economy and also in microeconomics to show the options open to an individual firm. All points on a production possibilities curve are points of maximum productive efficiency or minimum productive inefficiency: resources are allocated such that it is impossible to increase the output of one commodity without reducing the output of the other. That is, there must be a sacrifice - an opportunity cost - for increasing the production of any good. All resources are used appropriately and as completely as possible-without the situation becoming unsustainable (Wikipedia Website).
In economics...
14 Pages(3500 words)Essay

Principles of Environmental Economics

...Principles of Environmental Economics In Alba in Bahrain, the environment and its sustainability has been greatly impacted on by consumption. A number of photographs taken from the area clearly depict how land is utilized in an effort to manufacture and produce goods and or services as well as the impact of consumption on the environment (Hussein 212) The first photo shows a busy highway junction with various types of automobiles. The heavy automobiles are ferrying consumables and are emitting a lot of smog which has formed as clouds. Consumption of the non-renewable sources of energy pollutes the environment. The second photograph shows a refining zone with cloud emissions. The area is de-forested and there is no sign of life...
2 Pages(500 words)Essay

Principles of Economics

There may be two types of efficiency in the market Productive efficiency and Allocative efficiency.
The perfectly competitive market ensures maximum efficiency. In perfectly competitive the maximum profit point is where the marginal cost is equal to marginal benefit and since for them MR = AR= P. thus the profit maximization point i.e. MC =MR also ensures MC = MU (price). This means that in perfectly competitive markets the marginal benefit to the society derived by customers while consuming the product is just able to cover the marginal cost incurred by the society through the producer. Thus the marginal loss to the society is equal to the marginal benefit to the society which is a condition for efficiency. Which is not case...
5 Pages(1250 words)Assignment

Principles of Economics

... Principles of economics Suggest how an economist would approach the problem of alcohol abuse. Provide two (2) possible solutions to this problem. Include the four (4) elements of the economic way of thinking in your analysis. An economist is always concerned with the optimal distribution of scarce resources in society; therefore, concerning the issue of alcohol abuse, an economist will try to sculpt the action or behavior. The main purpose is to find patterns and apply this to predict potential results of alcohol abuse. Practically, it is very hard to model actions since there are so many distinct variables involved. The problem of alcohol abuse is not easily overcome because alcohol is highly addictive. In this case, if the alcohol...
4 Pages(1000 words)Assignment

Principles of Economics

...Principles of Economics QUESTION Suppose Royal Berkshire (a fictional similar to Royal Holloway) charges students for parking permits to park their car on campus. It decides to lower the price of a parking permit on campus from £100 per semester to £5 per semester. a. What do you think would happen to the number of students desiring to park their cars on campus?(2 Marks) The lower parking fee is likely to attract more students. The number of students parking within the university premises is therefore very likely to increase drastically. b. What do you think would happen to the amount of time it would take to find a parking place? (2 Marks) The increased number of students looking for parking is going to resonate in scarce parking space...
4 Pages(1000 words)Assignment

The Transformation of Management Principles in Ernst and Yong

The world is becoming a global village. The evolution process has changed the face of the earth and all her nations. The economy has changed and so have the governing principles on which they are based. Hence, the managing techniques for the betterment of quality in living and communication have undergone metamorphosis too. At the workplace, change is a constant factor; growth and progress are prerequisites to survival in a competitive atmosphere. The process of adaptation and reformation happens at various levels and varied paces in each organization. How commercial organizations and the people within the organizations, transformed while contributing themselves to transformations, can be understood through case studies of various...
8 Pages(2000 words)Case Study

Practices and Principles of Adult Nursing

These would gradually reduce her little depression and give her more hope over her life. And also one fact should be noted that she is a 65-year-old woman, so she still has chances of recovery.

Osteoarthritis: The National Institute of Arthritis and Musculoskeletal and Skin Diseases has this definition for Osteoarthritis as “ Is the most common type of arthritis, especially among older people. Sometimes it is called degenerative joint disease or osteoarthrosis. Osteoarthritis is a joint disease that mostly affects cartilage. Cartilage is the slippery tissue that covers the ends of bones in a joint. Healthy cartilage allows bones to glide over one another. It also absorbs energy from the shock of physical activity&...
9 Pages(2250 words)Assignment

International Business Economics

According to Adam Smith, the absolute advantage would be realised as long as the cost of production differed from between countries, one or both countries would gain by trading. An example to illustrate this is a situation where we have two countries A and B which produce two similar goods X and Y. The figures show labour cost in hours for producing one unit of a good

David Ricardo formulated the theory of comparative advantage and argued that even if one country is more productive in both lines of production it would be still profitable to trade. Country A is more productive in both lines of production but it will still be profitable to trade with country B, this is shown by first stating that country A is more advanta...
6 Pages(1500 words)Assignment

Human Performance: Theories and Principles of Motivation

I have been assigned two HRM consultants who are busy designing the motivation questionnaire to be administered to all the group employees. However, this also gave me an opportunity to reflect over my personal strengths and weaknesses as I would soon have the most responsible task of convincing the top management about the contents of the questionnaire and the finalization of motivation report and its possible uses in the group in the formulation of exact policies and tactics to improve employee morale. My immediate boss gave me this entire assignment breaking the line structure and formalized it by getting it ratified by the board. He also built an incentive and bonus deal for me to be awarded on the successful completion of the...
12 Pages(3000 words)Case Study

Issues in Applied Economics

A major issue then, becomes the convincing obligation by the polity not to abuse its force. Because institutions are planned by people with different bargaining powers and not for sake of effectiveness, some models may be less competent than others and due to path dependency, may continue for a long time, resulting in sluggish economy. The shortage of realistic commitment by the state not to suitable property human rights accounts for the incompetent institutions that have developed in different countries. To humor, such situation provides disincentives to investment in socially profitable enterprises, and generates groups with vested interests in preserving the status quo constraints.

Institutions present the fundament...
6 Pages(1500 words)Term Paper

Economics or Ethics

Several CEOs in America have in coalition with top managers deviated from the norms of corporate governance and caused immeasurable woes to the stakeholders. Using their power and ego they chased the wealth for personal gains without any concern for the shareholders or other stakeholders of the company. Enron, the world’s largest energy trader at one time, had to file bankruptcy under Chapter 11 when about 5000 workers lost their job (Bhattacharya, 2004). Arthur Anderson, one of the big five auditing firms was charged to have colluded with the management to misappropriate funds and project a picture different from the reality. Income was inflated and then all concerned papers were destroyed. The leadership at Enron was conce...
6 Pages(1500 words)Assignment

Managerial Economics and Business Environment

Once the above said subject matter is clearly sorted out, the next emphasis would be on the concepts like the opportunity costing, incremental principle, marginal principle, discounting principle, the principle of time perspective, and calculation of economic profit as the guidelines to the scope of managerial economics. (Surender. V, 2008).
To start with, we consider a firm for which different processes have to be carried to achieve its objectives of profit maximization (assuming that all the organizations work with the view to maximize profits). If firms from different sectors are identified simultaneously, then the working of the economy as a whole could also be analyzed which in turn is useful in the decision-making proce...
15 Pages(3750 words)Assignment

Relationship between Money Supply and Inflation in Saudi Arabia

Over the recent past, the effects of money supply, debt and inflation have become contentious issues for debate. Furthermore, frequent cautions concerning the risk of very large budgetary deficits aver that this would send up the upcoming state debt and capital rate as indicated by the rates (interests). As a nation, Saudi Arabia has a bi and enduring budgetary deficit over the past two decades and the government has been forced to go into the market so as to have loan access and to make up for the deficits. Given the impact of this on inflation and other economic variables, it's imperative and of great alarm for strategy architects (strategists) to understand how microeconomics has an effect on money supply, financial plan defici...
10 Pages(2500 words)Speech or Presentation

An Evaluation of the Role That the Principles of Behaviour Therapy Have to Play in Clinical Hypnosis

Hamburg (2006) first used this combined effort to treat two patients who were scared of dying. He uses his paper to encourage clinicians to refrain from not using their knowledge at the introductory classes of hypnosis but to go into it deeper. Many therapists at that time were taking the bold step of combining behavior therapy with hypnosis (Chaves, 2006). One group used hypnosis for desensitization therapy (Kirsch et al, 1995). However, there was general disagreement about the manner of hypnosis being employed and the methods of mentalist constructs. Chaves who strongly believed in the treatment combination used it as a base for many of his therapeutic interventions (Chaves, 1997a as cited in Chaves, 2006). The hypnotic therapy...
8 Pages(2000 words)Article

Introductory Economics and Finance: Why Governments Regulate Firms and Markets

By government regulation, it is meant by the rules administered by a government or government agency to influence any economic activity which determines the price, types, and standards of products, and most importantly the conditions under which the entry and exit of the firms are possible.

Like death, it is impossible to keep away from regulation in about every aspect of daily life. The business regulation may be classified into two- economic and social (Litan). The economic regulation deals with price controls and the entry limits of the firms into markets. The second type regulation mostly deals with externalities (the outside influences of the company or firm which may or may not be decided by them)

Examp...
6 Pages(1500 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Article on topic Principles of Economics: Inflation for FREE!

Contact Us