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Solutions to Inflation

Keywords: answers to inflation, inflation solution

Introduction

In the recent past the world economical environment has been at a the stand still this is because of this of unstable cost-effective growth in the world today. This is as a result of the poor movement of resources in the worlds, thus resulting to inequality amongst individuals in the universe resulting to negative aspects such as inflation of the world currencies. Increased prices of goods, decline in consumer spending and scarce syndication of resources. These effects leads to the change of the criteria of the individuals lives to worsen because they are facing financial meltdown (Mishkin, pg 38). Which trend of economic crisis will remain for years as the world overall economy will be face instability as a result the politics and financial meltdown that happens to be being experienced in the world today.

In this paper I will highlight on Inflation, as you of common financial crisis that has effects on the world today. Inflation can be an economic crisis that is from the general increase in the prices of the normal services and goods in a given time frame. Therefore inflation is described as the situation where in fact the prices of the commodity increases and the money unit buy a fewer good or services. Thus, forcing the users of the goods and services to pay more for less resulting to the purchasing of a small amount of good at a higher price (Mishkin, pg 138).

What problems are associated with inflation?

Inflation is associated with a great deal of issues that are major influencing the consumers, on problem that is associated with the loss of the worthiness of the amount of money. This negative result will make the worthiness of the money of the influenced country to be positioned low when compared with the other currencies, thus making the exchange of the currency with other countries currencies to give big money for the same value (Shah, par 5).

The other aftereffect of inflation is the shortcoming to detect the future of the inflation, this is because the resources that are being utilized by the traders are scarce which can make that the buyers who are planning to invest in the united states to choose to spend money on other countries in efforts targeted at salvaging there business from collapsing.

Inflation also brings about the reduced amount of the services and goods; this scarcity of these essential commodities is because the producers of these goods lack the recycleables for producing the products aren't in supply as almost all of the suppliers say that the price tag on development is high. Thus, makes the customers lack the scarce goods that aren't in source.

Causes of Inflation

There are different factors behind inflation in line with the research that is conducted; it has resulted to merged thoughts from the economic experts who argue that inflation is caused consequently of either the quality or quantity ideas (Macroeconomics, par 1). Quality theory is where in fact the retailers of the goods hide the commodities and only takes out them when the demand is high, while Quantity rests on the currency supply in the united states in either the blood flow or its movement.

One main cause of inflation is the federal government activities; this is when the government prints excess money in attempts aimed at dealing with a given crisis. The increase in the supply of the excess money in the united states makes the worthiness of money drop, and from this drop the prices of commodities increase thus bringing on inflation (Mishkin, pg 68).

Inflation is also cased because of this of national bad debts and international loaning, this where in fact the developing countries which borrow funds from the develop countries have to deal with the heavy passions that is enforced about them by the developed countries. If they are paying the debt thus this problem is enforced on the citizens of the united states thus will have to buy the essential products at a member of family high price.

Another reason behind inflation is the rise of the production cost, this increase of the development cost will result to the increase of the prices of the final products (Macroeconomics, par 2). This consists of the increase in the price of the raw materials this will automatically lead to the price of production. Thus, the final product being expensive, this will also slice across other aspects which include upsurge in the pay of employees.

Inflation may also be consequently of a rise of the federal fees that is offered to the customer's products, which include products like Petrol, Smoking, Food, Electricity amongst others. Regarding to (Macroeconomics, par 2) the upsurge in these vital commodities will automatically lead to the final consumers forced to carry the burden and once the prices of these commodities rises they will reduce even after the taxes increased are reduced.

Wars are also seen as another cause of inflation, it is because the political instability of the countries might disperse to the level of affecting the other countries that remain the united states that is involved in the war. A good example is when the USA attacked Iraq the political instability affected the entire world this is because the way to obtain oil was reduced drastically, the same is currently being reassessed in Africa today with the ongoing problems on Libya by the US lead troops.

Solutions to Inflation

Inflation can be fixed in many ways one solution of inflation is the participation of each section of the government when coming up with all the key decision such as printing of the united states currency. The leader will get information from the economic experts on the importance of stamping money thus making him more aware of the consequences.

The other way of minimizing inflation is to lessen wars that are commonly being experienced in the world today (Shah, par 4). These reduced situations of political instability will lead to easy flow of recycleables thus lowering inflation.

Another way of reducing the conditions of inflation in the growing countries, is when the developing countries stop or reduce the conditions of international debts and begin to depend on there own resources. This will subsequently make the countries to placed the hobbies for themselves and thus use it to develop there country and market.

Policies that will reduce the re-occurrence of inflation

There are several insurance policies that are placed in place to be able to ensure that the instances of inflation are reduced one insurance policy is the economic policy. Such insurance policy will check up on the degrees of inflation in the country this body will check up on the interest levels of the united states and inform the federal government of these changes (Inflation, par 1).

Another policy will be the Fiscal policy this is where the government bank checks carefully on its expenses and its taxes this will ensue rte country has learned its requirements; in this stage the government will increase it fees and reduces its costs.

The other coverage to be integrated by the government will be the exchange rate coverage, this is when the country boost the value of there currency high this making the money more valuable (Inflation, par 4). The past policy could be the supply side coverage this will boost the productivity and comprehensiveness of the products; this will ensure that all the states organizations are privatized in order to increase productivity thus reducing inflation situations.

Work Cited

Inflation. "Economic Policies to Reduce Inflation". 2008. Looked at on 24 march 2011 from: < http://www. economicshelp. org/blog/inflation/economic-policies-to-reduce-inflation/>

Macroeconomics / International Economy "Factors behind Inflation". 2006. Viewed on 24 march 2011 from: <http://tutor2u. net/economics/revision-notes/a2-macro-causes-of-inflation. html>

Mishkin, F. S. "The Economics of Money, Bank, and Financial Markets. " NY, Harper Collins, 1995. Print out.

Shah, A. "Global FINANCIAL MELTDOWN". 2008. Viewed on 24 march 2011 from: <http://www. globalissues. org/article/768/global-financial-crisis>

What Are The FACTORS BEHIND Inflation "What Are The Causes Of Inflation And Possible Solutions To It?"2010. Seen on 24 march 2011 from: < http://www. blurtit. com/q419176. html>

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