The Government Should Play an Active Role in Managing an Inflationary Economy

983 WordsDec 21, 20124 Pages
The government should play an active role in managing an inflationary economy. I agree that the government should play an active role in managing an inflationary economy. Buck (2011), stated that “The overwhelming majority of economists around the world believe it is appropriate for the government to take actions to promote economic growth and maintain low unemployment and low inflation.” Parkin (2012: 522) described inflation as “a persistently rising price level” and price level as “the average level of prices, and the value of money”. A price increase would cause people to buy less, and a decrease in demand for products would cause prices to fall. Parkin (2012) said that expected inflation is promoting a healthy and a strong…show more content…
The government takes measures in a short or long run to ensure a stable currency, enforce property rights, foster credibility, attract investment and promote a healthy environment through sound monetary and fiscal policy. A credible & reliable government would lead the country towards a sound economic growth, provide the best opportunity to individuals and firms to grow their profits as well as to achieve national investment & growth objectives and goal. Especially in current uncertain economic environment, the government should act more active to minimise the impact of Eurozone crisis and economic turndown to both consumers and firms and help the economy recovery. It will be a disaster if the government takes no action to control the economic risks. In conclusion, I agreed that the government should play an active role in managing an inflationary economy, keep a close watch on change on the economy and trends, response with an adequate policy to strengthen the business environment, maintain the stability of currency, and develop a sound and sustainable economy. BIBLIOGRAPHY Advameg, 2012, Gunited States - Economy,Advameg.Inc. http://www.nationsencyclopedia.com/Americas/United-States-ECONOMY.html [2 Dec 2012] Buck, J, 2011, The Economic Role of Government, http://econperspectives.blogspot.sg/2011_08_01_archive.html [2 Dec 2012] MAS, 2012b, Macroeconomic Review-Volume XI Issue 2, Monetary Authority of

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