Causes Of Inflation

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N-1014 Economics for Accounting and Finance Anees Tariq – 956508 According to Mankiw and Taylor, 2014, inflation is an increase in the overall level of prices in the economy. Describe the main causes of inflation and the associated costs. Explain how inflation is beneficial to a country and how deflation can affect the economy of a nation. Use relevant economic theory, examples and academic literature to support your answer. Introduction The word economy is an expression from the Greek implication of ‘one who manages a household’. This is an accurate meaning and makes sense because the economy is always confronted with many decisions precisely how a household is. (Resources.seattlecentral.edu, 2017) The economy is a well-structured and sensible system that displays the economic wellbeing of a country established on how capable they are on managing there resources. This is based on the growth domestic product (GDP). The higher the GDP in a country will indicate how well the living, goods and services the country abstains. An addition to this the income that the country will receive also influences this. However, the economy can change vastly through money going out, unemployment, inflation and deflation In this assignment, I will be concentrating on the main causes of inflation and the associated costs. Following on I will be explaining how inflation will benefit countries and how deflation can affect the economy of a nation. Within the assignment, I will be
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