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Chapter seven - Essay Example

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According to the ideas of Krugman and Wells, inflation simply refers to a persistent increase in the prices of commodities in an economy. When this happens,…
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Chapter seven
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Chapter seven

Download file to see previous pages... The discussions about inflation actually impacted on my thoughts. First, now I know that inflation results from the increase in the costs of production which compels producers/sellers to increase the prices of their commodities. In addition, I learnt about the negative impacts of inflation in an economy (Baumol, W.J. & A.S. Blinder, 2007). As these authors examine, inflation is not a good experience since it can lead to an increase the costs of living, unemployment and abandonment of a country’s currency. These are very important lessons that not only enlighten me, but prepare me as an economist.
The knowledge about inflation can help me in making important decisions regarding finances. Since inflation destructive, it should be adequately controlled. If I become a policy maker, I would apply these scholars’ ideas on inflation control. In case it occurs, I can advocate for feasible monetary policies such as credit squeeze, increased interests rates and initiate projects that can stimulate economic growth. This can help in saving the economy from ...Download file to see next pagesRead More
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