Inflation Essays -- Economics

InflationINFLATION merchantman OUR ECONOMY GROW WITHOUT IT? INFLATION CAN OUR ECONOMY GROW WITHOUT IT? What is pretension? The definition of ostentatiousness, agree to Websters Revised Unabridged Dictionary, is an undue blowup or increase, from oerissue. Although, Websters is considered by most to be the overall outflank dictionary, WordNet states the meaning of inflation a lot cle ber by saying, its a general and progressive increase in prices. It occurs when the nourish of goods coats faster than the value of money. The usual approximate measure of this is the Consumer Price Index, which weigh the prices of different goods according to importance in a typical budget and then shows how a lot the prices of these goods take increased. This immediately raises some problems for example, the weight of the goods must change over time. The importance of computers was not measured in the price index c years ago. Another problem is the failure of the price index to obtain changes in quality. The quality of a good may have change by 20%, while the price has only risen by 10%. The consumer price index doesnt odour this should be a factor, but many would disagree. Hence, inflation is not easy to define in practice. This should be kept in mind when discussing how to defeat inflation. There have been numerous theories on how to defeat inflation and even some theories on whether, or not, it should be defeated at all. Some say that inflation is not only expected, but often, rented. Economists believe that in order for the scrimping to expand and grow, there has to be some level of inflation.Therefore, the opposite holds veritable as well. If you want to lower inflation, you have to accept a semi-standard preservation. They cry (out) this tradeoff the Phillips Curve. The Phillips Curve is thought to be the proper way of match economic step-up and inflation. For this reason the Federal Reserve is always feel for the perfect equilibrium at which we erect m aximize our economic growth while keeping inflation as minimal as possible. They do this by increasing and decreasing use up paces. Although, Economists and the Federal Reserve remain firm by the Phillips Curve as a general rule for not letting inflation get out of hand, it has been proven many clock in the past that it is possible to have a very effectual and prosperous preservation without raising inflation at all. There are even exa... ...creased. This would show a truer relation of the prices of goods to the inflation of the economy. I can see the Federal Reserves reasoning behind raising interest rates to slow down the economy and lower inflation, but they need to realize that the rate of inflation is not completely dependant upon the rise and fall of the economies well-being. The past has proven to us numerous times that the economy is quite capable of being stable and prosperous without effecting the inflation rate in a negative way. Thats why I feel that it would be in the nations best interest to continue letting the economy expand into bigger and better things without raising interest rates to superfluous proportions. WORKS CITED Forbes, Steve. Bad Idea Begets Bad Economy. Forbes. Oct. 9, 1995 p23. Dentzer, Susan. Honey, I Shrunk the Price Tag. U.S. watchword & World Report. Sept. 23, 1996 p72. Forbes, Steve. Stop Stunting Our Prosperity. Forbes. Oct. 16, 1995 p27. Inflation. Hypertext Webster Gateway. Jan. 20, 1999 internet. http//work.ucsd.edu5141/cgi-bin/http_webster?inflation Bootle, Roger. Chapter 2-Prices. The Death of Inflation. Nicholas Brealey Publishing. 1996 p488-489.