The 1970S What Are The Reasons For This And Will They Endure Essay, Research Paper
Inflation has been more subdued than in the 1970s. What factors explain this and are they likely to endure?
Inflation is a sustained increase in the general price level leading to a fall in the purchasing power of money. It is caused by two major groups of factors: The demand-pull factors, when the total demand for goods and services exceeds the total supply and the cost-push factors, when firms increase prices in order to maintain or protect profit margins.
Inflation in the British economy has over the last decade been more subdued than in the 1970s. This long period of low inflation has been brought about by various factors related to cost-push and demand-pull theory. At the start of the 1990s inflation was high (10.9% as measured by the RPIX) which had been brought on by an increase in aggregate demand and by firms trying to make more profit by passing costs on to the consumer. This high level of inflation was reduced by high interest rates at the end of 1990, as consumers were reluctant to borrow and therefore saved more allowing less spending. Along side these interest rates the global economy was also slowing which had a negative effect on inflation and also helped to bring it down.
The exchange rate was anchored to the low inflation German economy which caused a further dip in inflation because it encouraged British companies to keep their costs under control. The measure of unit labour cost inflation fell from 10 0.3 % in three years. Producers started to absorb costs instead of passing them on to the consumer. As a result of this, by the end of 1993, inflation fell to below 2%.
One of the major reasons that inflation has been so low over the last few years was due to the introduction of an inflation target. This was a figure set by the government to which they would try to keep inflation. It has a number of benefits. Primarily it reduces inflationary expectation, as people believe that inflation will be kept at a low rate then they will not ask for increases in their pay, so unit labour costs are controlled. It also gives a clear target for monetary policy. The decision to let The Bank of England take control of inflation targeting also helped to keep the level of inflation stable because they can act quickly and are not restricted by the politics behind their actions. This allowed for the prompt action of raising interest rates in 1998 in order to control aggregate demand and as a result inflation headed downwards.
These are the reasons that inflation has been so low over that east ten years. But will they endure? The monetary committee of the Bank of England will carry on its task of setting interest rates in order to control inflation and soon it will be totally independent allowing it to work even more efficiently. Obviously our exchange rate is not stilled tied to Germany and so that factor has no bearing on the inflation rate now. But if England joined the Euro it would anchor its exchange rate, which would affect the price level and therefore the inflation rate.
Inflation is very hard to control totally as the causes of it are not easily manipulated. But at the moment the government seem to have all the factors in the right quantity as the rate is not only low but also quite steady. I believe that if there are no major shocks to the economy then inflation is set to stay low.
Другие работы по теме:
Letter Essay Research Paper When examining an
Letter Essay, Research Paper When examining an issue it is essential that you look only at the facts and not let your opinion get in the way of what is known to be truth. Such is the case in the
Booker T. Washington V. W.E.B. Du Bois
Essay, Research Paper Booker T. Washington and W.E.B. Du Bois were both influential leaders in the fight for desegregation. Booker T. Washington led the less violent and subtle crowd. W.E.B. Du Bois directed his followers in more of a let s get something accomplished now , rather than Washington s more subdued approach.
Nixon Essay Research Paper In June 1970
Nixon Essay, Research Paper In June 1970 Nixon signed into law a bill lowering the voting age in federal elections from 21 years of age to 18. In mid 1971, the 26th Amendment to the Constitution, extending the franchise to citizens 18 years of age in all elections, was ratified. In his January 1971 State of the Union message to Congress, Nixon outlined six sweeping proposals.
Dollarization Essay Research Paper Richard W Stevenson
Dollarization Essay, Research Paper Richard W. Stevenson s article Greenspan View on Wider Use of Dollar discusses a process he refers to as dollarization. According to Mr. Stevenson, A number of countries have been considering abandoning their national currencies and adopting the American dollar the accepted international benchmark of stability as a way of reducing interest rates, inflation, and exchange rate volatility.
Analysis Of 1997 US Macroeconomic Predictions Essay
, Research Paper Analysis of 1997 U.S. Macroeconomic Predictions The U.S. economy ended 1996 at a blistering pace of 4.7% growth rate of real GDP in the fourth quarter. Despite this strong growth, the inflation rate remained relatively low in fact the CPI showed its lowest core growth rate in the last 34 years.
Canadian GDP Essay Research Paper The output
Canadian GDP Essay, Research Paper The output or GDP of Canada has increased from 1995 to 1999. This means that more people became employed or productivity has risen. With the GDP on the rise, Canada is able
The Beach And Us Essay Research Paper
As angry waves crach on the sandy plain, Gulls fly as they escape the falling sea. Clouds form above to add the threat of rain, It’s vendetta clear to set it’s bombs free.
Inflation Essay Research Paper InflationInflation is defined
Inflation Essay, Research Paper Inflation Inflation is defined as ?a period of rising prices when the purchasing power of the dollar is falling.? What this boils down to is that as time goes by the dollar bills worth decreases while at the same time prices rise. Now when I say the dollar bill?s value decreases I don?t mean a dollar reduces to ninety cents.
Control Of Inflation Essay Research Paper The
Control Of Inflation Essay, Research Paper The governments of most developed economies now appear to be primarily concerned with inflation and how to keep it down as opposed to maintaining full employment or restricting the
Greenspan Essay Research Paper Since Alan Greenspan
Greenspan Essay, Research Paper Since Alan Greenspan became chairman of the FED, the country’s economy has reflected many positive results. He has done a terrific job. Allan is a very bright man who is always thinking of ways to prevent problems before they happen in the economic sector of the nation. All economists have been very content with his job just until now.
Greenspan Essay Research Paper Federal Reserve Board
Greenspan Essay, Research Paper Federal Reserve Board Chairman Alan Greenspan vows to promote ?low and stable inflation.? The main goal of the U.S. economy is to maintain price stability. This reduces the likelihood that imbalances could develop that would ultimately undermine the record economic expansion that the U.S. is currently having.
Eveline Essay Research Paper EvelineJames Joyce s
Eveline Essay, Research Paper Eveline James Joyce s Eveline describes a story of a confused girl that is stuck in a situation that could change her life forever. Eveline, suppressed by her mother s deathbed wishes, is mentally subdued by her abusive surroundings, making it impossible for her to make a better life for herself.
AdAs Model Of A Boom Essay Research
Paper Explaining a ?BOOM? using the AD-AS model The Business Cycle or Trade Cycle is characterised by a regular cyclical pattern with four distinctive phases: the expansion, the peak, the contraction, and the trough.
The Politics Of Boom Essay Research Paper
The Economist published an article on September 30, 2000 entitled “The Politics of Boom”. This article brings up several issues that we have discussed in Economics 103 this
Full Employment And Gdp Essay Research Paper
ECON 240 Assignment 1 The full-employment rate is an arbitrary level of employment that takes into account frictional and structural unemployment. It is used to calculate equilibrium in the changing labor market. It is difficult to calculate the full-employment rate. Economists first find the natural rate of unemployment; in so many words means that those members of the labor force that really want a job have one.
The Annual Inflation Rate Essay Research Paper
The Annual Inflation Rate Just about everything we do as a nation lends to the annual inflation rate. In this article, though, I have chosen four of the most important variables that influence inflation the most. Inflation is the sustained increase in prices, or in other words, a steady decline in the buying power of the dollar.
Economic Inflation In Australia Essay Research Paper
ECONOMIC OBJECTIVES – INFLATION Inflation is a rise in the general level of prices of commodities. Inflation is a major economic issue in Australia, and is one which requires stable management for durable and long-term improvements. Low inflation and steady economic growth; have emerged as outstanding economic achievements this decade.
Inflation 2 Essay Research Paper INFLATIONCan Our
Inflation 2 Essay, Research Paper INFLATION Can Our Economy Grow Without It? INTRODUCTION: What is inflation? The definition of inflation, according to Webster s Revised Unabridged Dictionary, is an undue expansion or increase, from overissue. (Hypertext, 1) Although, Webster s is considered by most to be the overall best dictionary, WordNet states the meaning of inflation a lot clearer by saying, it s a general and progressive increase in prices. (Hypertext, 1) It occurs when the value of goods rises faster than the value of money.
Inflation Essay Research Paper Inflation a rise
Inflation Essay, Research Paper Inflation, a rise in the average level of all prices, is a problem that can affect both developed and undeveloped countries. It occurs when the economy is producing at or near full capacity. As inflation increases, the purchasing power of the dollar decreases. As prices rise, wages and salaries also have a tendency to rise.
Lord Of The Flies And Heart Of
Darkness Essay, Research Paper A Comparison and Contrast of Lord of the Flies and Heart of Darkness Achebe uses positive tone in his description of the African jungle; whereas, Conrad makes use of negative connotations. Their portrayals of the jungle reflect their attitudes toward their subject; Achebe sees it as a hospitable home whereas Conrad sees a tragic trap.
Monetary Policy Essay Research Paper I IntroductionIn
Monetary Policy Essay, Research Paper I. Introduction In order to promote national economic goals, a central bank acts to influence the availability and cost of money and credit, this is known as monetary policy. The Fed has three main tools with which to carry out policy. These instruments of monetary policy are open market operations, discount policy and reserve requirements.
The BhagavadGita Subdued Essay Research Paper The
The Bhagavad-Gita Subdued Essay, Research Paper The Bhagavad-Gita most likely begins with philosophy instead of ending with it because it gives people the major message of the whole text. If you keep reading and find out the details of how you are supposed to be a good Hindu is up to you. If it were at the end, it would probably not be a holy book, but just a story with a couple morals attached to the ending.
Economic Report Of Ford Essay Research Paper
Economic Policies of Gerald Ford In 1974, there was a large rise in oil prices which gave a large amount of purchasing power to the oil-producing companies. “Inflation, strong demands for
The Consumer Price Index Essay Research Paper
Sept. 28, 199 Inaccuracies of the Consumer Price Index(CPI) The Consumer Price Index is a measure of the prices of a fixed market basket of some 300 consumer goods and services purchased by a “typical” urban consumer. The 1982-1984 period serves as the base period so analysts can compare other year?s changes with this base period.
Grade Inflation Essay Research Paper What is
Grade Inflation Essay, Research Paper What is the definition of grade inflation? The most obvious definition is that grade patterns change so that the overwhelming majority of students in a class, college, or university receive higher grades for the same quantity and quality of work done by students in the past.
How Are Automatic Stabilizers Used To Combat
Inflation Essay, Research Paper How are Automatic Stabilizers Used to Combat Inflation? In today?s economy, there are devices present called automatic stabilizers. Automatic stabilizers, are mechanisms which aid in the correction of an economic problem without the interference of anyone or anything.
Cheap Decorating Essay Research Paper With today
Cheap Decorating Essay, Research Paper With today’s inflation how can anybody find the money to decorated their ugly boring living room? Well, I have the solution for you, decorate with little money. Just follow these three easy steps and you’ll be on your way to a beautiful room.
Economics Essay Research Paper
Explain why the problem or topic written about in the article is important in the study of economics. This article is important to the study of economics because economics deals with the management of the income, supplies, and expenses of a household, community, government, or other group or organizations.
Big Bang Essay Research Paper Before The
Big Bang Essay, Research Paper Before The Big Bang Every since scientists came up with an idea of how the universe started and was created, through the Big Bang, there has always been discussion and questioning on what the universe was, before it was created. Was there nothing because there was no time and no God, or was there something we haven t discovered yet.
Death On Demand Reaction Paper Essay Research
Paper Death on Demand Reaction Paper Death on Demand was quit interesting. Throughout the novel several economic concepts were cleared up therefore, helping me to better understand them. But also, at the same time I was further confused about several others. I was especially intrigued by the following four concepts, and the characters in the novel helped my understanding of them grow.
Do Higher Wages Cause Higher Prices Or
Do Price Rises Cause Wage Rises? Essay, Research Paper Do higher wages cause higher prices, or do price rises cause wage rises?? What are the policy implications in either case?Inflation involves
Monetary And Fiscal Policy Essay Research Paper
Monetary and Fiscal Policy The Monetary and Fiscal Policies, although controlled by two different organizations, are the ways that our economy is kept under control. Both policies have their strengths and weaknesses, some situations favoring use of both policies, but most of the time, only one is necessary.
Federal Monetary And Fiscal Policy Essay Research
Paper The management of the money supply and interest rates is what is known as monetary policy, The Federal Reserve System (the Fed) was established by an Act of Congress in 1913 and consists of the seven members of the Board of Governors in Washington, D.C., and twelve Federal Reserve District Banks.
Minimum Wage Regression Essay Research Paper Jadro
Minimum Wage Regression Essay, Research Paper Jadro 1 John Jadro Webonomics Mr. Haessler 17 February 2000 Minimum Wage Regression The proposed increase in minimum wage will do a number of things to the economy. The greatest effect it has will be on inflation. There is a strong correlation between raises in the minimum wage, and raises in inflation.