Analysis of the Knowledge about Inflation - Essay Example

The currency loses its purchasing power and ability to buy large quantities of goods and services as it could before. Such increase in prices has a lot of impacts on the life of individual consumers, producers, the government, and the economy. Besides, they say that the increase in costs of production and the high demand for goods and services causes inflation.

The discussions about inflation impacted 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 learned about the negative impacts of inflation on an economy (Baumol, W.J. & A.S. Blinder, 2007). These are essential 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 is destructive, it should be adequately controlled. If I become a policymaker, I would apply these scholars’ ideas on inflation control. In case it occurs, I can advocate for feasible monetary policies such as credit squeezes, and increased interest rates and initiate projects that can stimulate economic growth. This can help in saving the economy from recession. Read More