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Inflation is here to stay, as prices will always go up - Term Paper Example

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Inflation is considered as a currency occurrence and not an economic occurrence, with monetary inflation always resulting in higher prices (Carson, Thomas & Hecht, 2005). Typically, inflation results from growth that is not proportionate in terms of the supply of money with…
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Inflation is here to stay, as prices will always go up
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Download file to see previous pages d fixed value in it, therefore, even if money was saved without using the banking system, it could purchase almost the same amount of goods fifteen to twenty years later compared to the time when it was first saved. Inflation started being experienced when the US decided to start using gold standards. Presently, when the government experiences shortfall in terms of cash, it purchases some from the Federal Reserve (Gosling & Eisner, 2013). The additional money that is put into circulation results in an imbalance between money and goods and consequently prices increase and inflation is experienced. There have been instances when inflation has been considered as invisible tax, as it is seen as the means used by the government to get free money from the public. The amount of commodities available might also drive the prices upwards, for instance, oil prices continue rising as a result of war in the major oil producing areas. The increase in prices is not entirely attributed to the war, but to the damage on the infrastructure including damaged pipelines and incapacitated refineries because of the war, which have led to a reduction in production, by almost fifty percent.
The effects of inflation have thrown nations in to prolonged periods of instability and central banks always seek to be watchers of inflation. Numerous politicians have won elections through promising the electorate that they will fight inflation but they lose their positions when they are not able to achieve this (Perry, Serven & Suescun, 2008). At some point, President Gerald Ford made a declaration that inflation was public enemy number one in 1974. It is therefore important to understand that inflation denotes the rate of upsurge in prices through a specific time and is usually a wide measure like a universal intensification in prices or an upsurge in costs of living in a nation. However, it can also be narrowly calculated, for instances of particular commodities like food and tuition fees in ...Download file to see next pagesRead More
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