The Economic Field Of Economics

Inflation is one of the most talked about words in society that causes a big problem in economics today. Inflation is an increase in the overall prices of goods and services and a decline in the purchasing value of money. This exists when the money supply surpasses the goods and services that are available. For this commentary, I chose to pick the article In a Venezuela Ravaged by Inflation, ‘a Race for Survival’ that deals with the topic inflation.

This task request will be focussed on providing input for the development of Inflation Working Paper (WP) currently in draft phase. The recent version of the WP is attached for your reference purpose only.

In the midst of World War II, bread could be purchased for around $0.10, less than $1,000 for a brand new car, and a nice middle class house would sell for around $4,000 - $6,000. However, in our current day we all know these items, along with everything else, cost much more today than they did during the second world war, a substantially greater amount. This shows that we experienced a noteworthy amount of inflation since the war. Shortly thereafter, in the mid-to-late 1970s, inflation skyrocketed to double-digit levels, which threw America into hysteria. Ever since, the general publics anxiety dwindled along with inflation rates, but the same public is still timid when it comes in regard to inflation, even though we have recently experienced minimal levels over the past few years. Even though most everyone knows that prices go up over time, they still do not fully understand the forces behind inflation. Hopefully some of the uncertainties are clarified in the following paper. Inflation, along with purchasing power, is depicted and elucidated in terms with how the two are congruent to one another. Also, this paper notes how measurements are taken to predict future interest rates, which helps everyone from consumers to producers, so they can be prepared for the change in value of their dollar.

Historians suggested that economic factors and over population were two main reasons that generated the price revolution. Economic factors are examined the degree of inflation included supply and demand, the amount of money in circulation, and the velocity of money in circulation (Levack, Muir, & Veldman, 2011). The accuracy of economic researches concluded that the combination of the factors created the great inflation.

The phenomenon of inflation has been described in three different views: a) general view, b) Keynesian view and c) modern view. According to the general view it has been described as the increase in the price of goods and services but decrease in the value of the money. According to Keynes, it is the states when there is increase in the goods and prices as well as increase in the employment. The inflation is caused due to the increase in the expenditure that causing the shortage of the goods and

Federal Reserve has two other tools that it can use to change the money supply.

Inflation can be bad for the economy. Inflation happen when there is a bigger money suppy than there are goods and services. A shortage in goods and services leads to there prices going up. In the text "Brief Principles of Macroeconmics" author Gregory Mankiw states that "some economists argue that the costs of moderate inflation are not nearly as large as the public believes"(Mankiw Chapter Intro). Why are people more afraid of inflation than deflation? It makes no since to me. A moderate increase in prices have been proven over time to improve the economic stimuli.

Economic inflation is large issue that tends to take place everywhere, this has even appeared in the early days of the United States. To be exact, inflation is the rise sustained in the general level of cost on services and goods over time in an economy. When the cost level grows the unit of currency buys less services and goods. Some causes for inflation include: push in profit, productivity decline, increase in house prices and the printing of more money. Often times these result in services and goods becoming less affordable due to an increase in prices.

A lot of literatures have already studied about the inflation and inflation prediction and in this paper literature review will be discussed from the theoretical aspect and empirical aspect. The researches of the inflation, which are studied, by a lot of scholars in the field of economics have been conducted for a long time especially during the 1970s and it is the heyday when people would like to pay more attention to research the inflation. The inflation has become a hot topic among the economic life and social life since 1987. However, no matter whether it is in the western economic field or in the Chinese economic field, people have different definitions on the inflation and so far there is no unified opinion and conclusion can be accepted generally by everyone. For example, Wyplosz and Burda (1997), Blanchard (2000), and Barro (1997) define that inflation is a sustained rising in the overall price level of products and services in an economy throughout the time period. By contrast, Zha and Zhong (2016) define that inflation is considerable as the mechanism to improve economic growth. In general, the common definition of the inflation is that the inflation is a continuous rising process in the aspect of price. In other words, the value of the currency decreases continually.

An economy is the wealth and resources of a country or a region. Economy mainly refers to the consumption of goods and services in a specific country or region. The United States of America is known across the entire world as having the largest economy. The economy in the United States today is now where near what it was many years ago. The current economic situation has the country trying to regain its high economic status. The United States economy is really not good in its current state, but somewhat better than it was five years ago. Many people are not aware of the problem that we have in this country. I think that

The relationship between inflation and unemployment is a topic, which has been debated by economists for decades. It is this debate that has made the opinions about it evolve. In this essay, the controversial topic will be discussed by viewing different economists’ opinions on that according to time sequencing.

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JCP has different types of fixed costs with their company. The most important expenses would be the rent for their buildings. Most of their companies are based inside of malls. The company pays a yearly rent to these malls in order to stay in business. Also other fixed costs would be insurance, any payment on loans JCP has out, management salaries and their advertising, Variable costs will change due to the company’s activity volume or level. Some of the Variable costs included materials, hourly production wages, sales commissions, packaging supplies, shipping cost and inventory. There are different factors that could affect these costs. One of those factors being how much JCP sales volume changes. Some costs will not

Inflation is defined as “the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.”[1]

This paper was prepared for ECN 150, Introduction to Microeconomics, Module 2 Homework Assignment taught by Nikki Follis.