Nobody downloaded yet

Evaluate the policies that could be used in the UK to meet inflation targets - Essay Example

Comments (0) Cite this document
Summary
From the year 1989 until 2015, the rate of inflation was 2.73%. The highest inflation rate was recorded on April 1991 at 8.50% and lowest February this year at 0%. The low price of fuel and energy caused the rate of…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92.1% of users find it useful
Evaluate the policies that could be used in the UK to meet inflation targets
Read TextPreview

Extract of sample "Evaluate the policies that could be used in the UK to meet inflation targets"

Download file to see previous pages The UK, just like the US and Germany, has a growing workforce, and its wages has also been increasing. The Europe’s unemployment rate was 9.8 % in March this year while it was 10.4 % last year the same time. In Europe, the lowest unemployment rates in March 2015 were Germany (4.7 %) while the highest was Greece (25.7 %) (Trending Economics 2015).
Demand side Inflation happens when there is a surplus of demand for goods and services over the supply; the supply remains constant. Demand pull inflation involves the rise of inflation as gross domestic product increases. At the same time, the unemployment levels will be expected to fall as witnessed in UK (Thirlwall & Barton 2014).
The situation is contributed by the increase in the government expenditure and no change in the tax structure. The rise in income of households is a major contributor of demand for goods and services. The increase in the supply of the money in the country leaves more non-reusable income with the people causing the demand for products and services (Miles 2014).
A loose monetary policy can cause the increase in money supply. In addition, inflows from other nations because of export will enhance the money supply. In UK, demand-pull inflation may be attributed to increasing disposable of the citizens. As the levels of income of people go up, the demand to buy things also go up (Willett & Laney 2014). When demand goes up, and supply remains stagnant, prices of goods will go up leading to demand pull inflation.
The government must make every effort to ensure that there is a balance between demand and supply to eliminate any case of inflation. When there is a surplus in demand, there should be strategies to ensure that the demand is met expeditiously. Inflation is not good for any country hence the need to maintain it at a low level.
Cost push inflation emanates from supply side; the rise in the cost of production and a constant demand causes ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Evaluate the policies that could be used in the UK to meet inflation Essay”, n.d.)
Evaluate the policies that could be used in the UK to meet inflation Essay. Retrieved from https://studentshare.org/macro-microeconomics/1695173-evaluate-the-policies-that-could-be-used-in-the-uk-to-meet-inflation-targets
(Evaluate the Policies That Could Be Used in the UK to Meet Inflation Essay)
Evaluate the Policies That Could Be Used in the UK to Meet Inflation Essay. https://studentshare.org/macro-microeconomics/1695173-evaluate-the-policies-that-could-be-used-in-the-uk-to-meet-inflation-targets.
“Evaluate the Policies That Could Be Used in the UK to Meet Inflation Essay”, n.d. https://studentshare.org/macro-microeconomics/1695173-evaluate-the-policies-that-could-be-used-in-the-uk-to-meet-inflation-targets.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Evaluate the policies that could be used in the UK to meet inflation targets

Intermediate targets

...that what the Central Bank is trying to do with the inflation (Walsh, 2003). For example, if the inflation is above the desired or targeted level and the Federal Reserve wants to bring it down, the idea would be to raise the interest rates so that the inflation rates could drop down (Gali, 2008). Therefore, according to its definition, inflation targeting refers to the process used the Federal Reserve with which the Fed estimates, plans and set a target for future inflation and with the help of monetary policy tools makes an attempt to accomplish the...
4 Pages(1000 words)Essay

Explain how inflation targeting operates in the UK and Critically evaluate the benefits of inflation targeting

...which it raises, the interest rates and growth of the economy through supply. The monetary policy committee (MPC) targets inflation by setting interest rates. When a shock hit the economy the committee action is not felt immediately. The results of adjustments in interest rates could yield tangible results after even two years and therefore the committee has to be forward looking (Paul 2006). The committee meets every month to set interest rate. The week prior to that, the committee has to gather information from a variety of sources, mainly the banks on the state of the economy. They then have to compare and put together with the reports of the previous...
8 Pages(2000 words)Essay

UK Government Policies

...investment in the form of common stock then it will have the right to partially or fully own the business. In preferred stock the company acts like an investor with no voting rights (International Monetary Fund, 2002). The parliament is yet to pass the vote on the banking bill which could further improve the situation as it claims it would. Though all or some of these policies are yet to be evaluated for their effectiveness, but it is still too early to say how they will shape the banking sector in the near future. The UK government, however, has been pro active with its policies (International Monetary Fund, 2002). It is still not known if the schemes...
6 Pages(1500 words)Essay

Inflation

...no longer works. Thus, economies and their governments always desired to have a low and predictable level of inflation. According to Marta Campillo and Jeffrey Mrion, best way to have a manageable inflation is not through institutional arrangements or the use of fiscal policy or monetary tools of Central Banks but rather by economic fundamentals, such as openness, political stability, and tax policy” (356). Different countries have different inflation rates. Some have negative inflation rates while others have double digit inflation rates. Among the economies in the world that have lowest...
3 Pages(750 words)Essay

Inflation Control by Government of UK

...in any case up to the commencement of the present commotion, has been those policies and measures have had three proportions. The fiscal, economic moreover the financial aspects. The justification in short considered by the UK government is simple , the monetary policy fiddles with the procedure tariffs in reaction to the shorter business sequence of advancements to hold up the sustainable financial augmentation also conserve the price steadiness during the longer term .Along side , this the Fiscal policy tends to humidify the vacillation within the real proceeds by way of mechanical stabilizers moderately than the situation through unrestricted fiscal...
10 Pages(2500 words)Essay

Is the UK Meeting its Recycling Targets

... does not have an effective glass recovery program in place to separate crystal and colour glass. There are different markets in the recycling industry for the two types of glass. If the UK establishes an efficient system to separate the products in their pickup efforts they could accelerate the process of bringing the material to the market and increase their glass recycling rate substantially. The UK realized they were lagging in this area and made a conscious effort to increase their numbers. In 2006 they were able to recycle 756,000 tons of glass, a number that still leaves them 125,000 tons short to reach the 60% European minimum target (British Glass, 2007). Despite the country not reaching the goal the environmental effects... of...
6 Pages(1500 words)Essay

UK Economic Policies

.... (2000): Market Research in Health and Social Care. London: Routledge. 10. Palma, G. (2003): ‘National Inequality in the era of Globalisation: What do recent data tell us?’ in The Handbook of Globalisation by Michie, J. UK: Edward Elgar. 11. Quilgars, D. & Jones, A. (2007): ‘United Kingdom: Safe as houses?’ in Home ownership beyond asset and security: Perceptions of housing related security and insecurity in eight European countries by M. Elsinga, P. De Decker, N. Teller & J. Toussaint (Eds). Netherlands: IOS Press. [Design of the housing policies in UK so as to turn the nation to one of the wealthiest in the world]. 12. Sentance, A. (1998): ‘UK...
2 Pages(500 words)Dissertation

Inflation

..., tried to analyze the Euro economic crisis critically where he applied a single currency meant that several of the solutions regarding economic problems could not be used. The most difficult task is to reduce the government borrowing levels while managing lower unemployment and economic recovery. He studied several European economies including Greece, Ireland and Portugal and found the following problems. High unemployment rates Stagnating economic growth hence increasing chances of continued recession High government borrowing High current account deficit because of non-competitiveness Pettinger best-suggested solution was currency devaluation. This refers to the reduction in the value of exchange rates .This would see regaining... of...
5 Pages(1250 words)Literature review

Inflation and Government Economic Policies

...Inflation and Government Economic Policies Inflation is the persistent rise in the price level of commodities in an economy over along duration of time. Such an increase in the price level arises due to dwindling value of money that may be caused by disproportionate summative demand or supply-side influences. Inflation caused by market factors occurs where an increased demand for goods by consumers lead suppliers to increase the cost of goods. Supply-side factors, on the other hand, triggers rise in the price of commodities where the rise in price of critical raw materials makes producers increase the selling price to meet the rising production cost. Economists tend to view moderate inflation favorably as it enables an economy... to...
2 Pages(500 words)Essay

Contractionary Monetary Policies in Australia Used to Control Inflation

... Contractionary monetary policies in Australia used to control inflation The Australian economy has experienced bursts of inflation and especially during between 2005 and mid-2008 (Morris 2012 p.117). The country was faced with the demand inflation that was influenced by the levels of aggregate demand in the economy. The demand inflation occurs due to the presence of enormous spending that exceed the country’s productiveness. The federal government through the Reserve Bank employed various contractionary economic policies seeking to fulfil its primary goal that involves maintaining an acceptable level of...
1 Pages(250 words)Essay
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 Essay on topic Evaluate the policies that could be used in the UK to meet inflation targets for FREE!

Contact Us