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Chapter 16/17/18 - Essay Example

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Of greatest interest was inflation. As Paul Krugman and Robin Wells explain, inflation is a situation in which the country’s currency loses its purchasing…
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Chapter 16/17/18
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Chapter 16/17/18

Download file to see previous pages... The other lesson learnt from this chapter is that inflation has very many causes. Amongst the outstanding ones are increased costs of production and increased money supply in the economy. Whenever these happen, inflation occurs. For instance, when there is a lot of money in circulation, people will have a higher purchasing power. Meaning, they will require to purchase more products. This will lead to high demand, thus resulting into demand pull inflation. Therefore, as these authors examine, in order to deal with inflation, several measures should be taken to check on the monetary policies in an economy. Amongst these measures include regulation of the interest rates and lending policies.
In this regard, I would like to point out that this chapter has adequately given me the necessary information that I out to have known long before. At least now, I know that inflation is man made and can be controlled. Hence, if I were to make decisions, I would formulate and enforce stringent policies to control money supply in the country. This will help in stabilizing the economy at all times.
In the chapter 17 of this book, these scholars present a candid discussion about the complexities of a macro economy. According to their point of view, the economy of a country should be properly managed because it involves a lot of players. However, before doing that, it is necessary to have a sound knowledge about different concepts of a macro economy. By having a deep idea about the models of macro economics, it might be easier to come up with measures to address issues like inflation, deflation and unemployment rates in the country.
Based on the ideas expressed in this chapter, I would like to categorically state that I have known much about the nature of a national economy. For sure, now I understand that for the country to have a higher and stable Gross Domestic Product (GDP), it ...Download file to see next pagesRead More
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