China And Indi The Biggest Largest Exporter Of Oil With A Large Population Essay

The term `inflation' defines a situation in which prices are rising and the value of money is falling. The cause of inflation is due to too much money in the economy ben printed and the high rise in demand. too few goods. An inflationary spiral tends to set in. Increasing prices produce a demand for higher wages: higher wages mean that goods cost more to produce: prices must go up again to pay for the wage increases.

(7 points) What are government’s fiscal policy options for ending severe demand-pull inflation? Use the aggregate demand-aggregate supply model to show the impact of these policies on the price level. Which of these fiscal policy options do you think might be favored by a person who wants to preserve the size of government? A person who thinks the public sector is too large?

This is an example of complicating the policy response. In recent years, a singular emphasis on targeting inflation has come to dominate debates on macroeconomic policy with strong calls to leave monetary and foreign exchange policies to an independent central bank. However, whatever the specific tools employed and regardless of who controls them, fighting inflation usually leads to higher unemployment and the risk of lower investment and growth in the medium term.

The causes of the inflation are not fully understood. Slow economic growth and slow increases in the money supply are considered the most probable suspects. At this time the money supply rose much more slowly than the Gross National Product.

The increase in international oil prices will affect many of these factors is all provinces which will result in either a positive or negative impact on output. For the big three provinces, the factors that will be greatly affected if the international oil price were to significantly increase are net exports and consumption. In these provinces their main exports are energy commodities which include oil. For example in Alberta, energy commodities accounted for 67% of their total exports in 2012 (Government of Alberta, 2013). Oil is a necessity good, so there will always be a demand for it. Due to this an increase in the price of oil generally increases the revenue for oil companies. For example in Iraq, the 4th largest producer of crude oil in the world, officials say that “for every $1 increase in the price of a barrel of oil, their revenues jump by $1 billion per year” (Bloomberg 2016). An increase in the value of exports increases the output of the big three provinces and shifts the output curve

Targeting interest rates that can directly control inflation. The monetary policy is one that quickly comes into play. Central banks are independent of the government and refrain from political influence. They can boost exports by merely weakening the currency. The benefits of the fiscal policy consist of direct spending to specific purposes, by using taxation they can discourage negative externalities, and have a shorter time lag. The potential costs of the policies can create budget deficits, having to spend tax incentives on imports, and may be motivated by politics.The use of the monetary policy runs the risk of hyperinflation, the time it takes for the effects to materialize, the technical limitations and the fact that financial tools affect the entire

If the economy suffers from inflation, the Government will like to check it. Then its Central Bank should adopt tight or contractionary monetary policy. To control inflation the Central Bank of a country can reduce money supply through open market operations by selling bonds or government securities in the open market and in return gets currency funds from those who buy the bonds. In this way liquidity in the banking system can be reduced.

The Federal Government uses the monetary policy and fiscal policy to establish and determine the best way to manage the economy. Monetary policy is used by the Federal Reserve to manage the money supply. This includes credit, cash, check, and money market mutual funds, with loans, bonds, and mortgages being the most important. This policy can be broken into two categories: monetary restraint and monetary expansion. As it states, one is trying to restrain the market while the other expresses expanding the market. With control over the money supply, the two categories for monetary policy can manage the inflation of the economy. After this has been complete, the unemployment rate is a second objective that is handled and reduced. Fiscal policy is used as reference to the tax and spending policies, and is handled completely by the Federal Government rather than the independent agency of the Federal Reserve. In comparison to the monetary policy, there is also two sub categories of expansion and restriction. This paper will explain why I believe the monetary restraint policy is the best option for maintaining a stable economy through the use of controlled spending by limiting the access consumers have to money, its reliability in being the solution to a growing problem, and the benefits we see from past occasions. Using the monetary restraint policy will require the Federal Reserve to increase the interest rate nation-wide requiring citizens to decrease spending and borrowing.

The use of both monetary and fiscal policies has been specifically aimed at reducing inflation and implementing policies for sustained economic growth. This paper will present a discussion on the definitions of each policy while examining their role in economy. Based on the obtained insights, the paper will discuss the best option for Australia and will justify the rationale. In the end, the discussion will be given a conclusive shape in which the key learning will be summarized and future context of policy implementations will be included.

We know that the expansionary fiscal policy can cause inflation, And eventually will, Meaning that at certain point the fiscal policy many need to change in order to keep inflation out of hand or either my limiting unemployment.

Inflation affects balance of payment of a country. It affects the development activities as people lose their confidence and encourage social evils.

The top three oil producing countries in thousand barrels per day are: Venezuela (1,372), Saudi Arabia (1,161), and Nigeria (1,044).According to OPEC’s website, WWW.OPEC.org, their principle aim is the, “Co-ordination and unification of petroleum policies of Member Countries and the determination of the best means for safeguarding their interests, individually and collectively. The Organization also seeks to devise ways and means of ensuring the stabilization of prices in international oil markets with a view to eliminating harmful and unnecessary fluctuations, due regard being given at all times to the interests of the producing nations and to the necessity of securing a steady income for them; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on their capital to those investing in the petroleum industry.” The remaining 50% of imported crude oil comes from non OPEC countries. Of these countries the top three producers are: Canada (1,569), Mexico (1,565), and Angola (325).

Inflation rate is the degree of which the currency is loses its value. So central bank tries to control this devaluation of currency and protect the purchasing power of the people. So fulfill these objectives central bank makes fiscal policy and monetary policy. With these policies central bank implements the taxes which comes as revenue and also how they spent it to the welfare of people. So they have the certain control on the money supply and demand as well. In this paper we will see how the independence of central bank regarding the monetary and fiscal policy leads to control the inflation rate better. In the central bank is independent in the decision making of making these policies that will lead to have a good control of inflation rate.

Hyperinflation is a rare economic phenomenon where inflation becomes out of control. The confidence in the country’s currency reduces significantly leading to a dramatic increase in the prices of goods and services, rising by 50 percent per month. Hyperinflation is often considered to be a manmade disaster. There are several theories explaining the causes of hyperinflation:-

Inflation is blazing subject that delays the economic development of the country. It is becoming extra hectic to economists, politicians and even people also. Factors on both demand and supply effect the inflation. So the stabilization strategies ought to consequently focus on both demand manipulation as well as