topics. Instead, you can address inflation from the market standpoint, how does

Question

topics. Instead, you can address inflation from the market standpoint, how does it affect customers, employees, employers, and the market in general? What happens when prices are increasing? What is causing the increase, can it be controlled? Can the government do anything to stop inflation? Do we want to stop inflation? Explore one or all of these questions in your discussion, plenty of article on this topic, and feel free to explore other countries inflation as some have a problematic issue with it. Keep researching,

Explanation / Answer

1) Inflation refers to sustained overall increase in price level in a stipulated period of time . So inflation makes price level rise and goods and services costlier . This diminishes purchasing power of consumers with fixed income . Employees gets higher wages because producers gain more by selling products at higher prices . Employers find it difficult to maintain profit levels by hiring workers at higher wages . In the market aggregate demand rises , this leads to inflation . production is more and output increases .

2) Inflation occurs mainly due to 2 reasons cost push ( rise of price of inputs ) and demand pull ( increase in AD ) . Yes the government can follow contractionay fiscal policy to curb inflation . Also tight money policy can curb inflation by restricting money supply in the economy which leads to lower AD . High inflation erodes the real value of money . So we should stop inflation from increasing .

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