Inflation Essays -- Economics

InflationINFLATION CAN OUR economy GROW WITHOUT IT? INFLATION CAN OUR ECONOMY GROW WITHOUT IT? What is inflation? The translation of inflation, according to Websters Revised Unabridged Dictionary, is an undue expansion or increase, from overissue. Although, Websters is considered by most to be the overall best dictionary, WordNet states the consequence of inflation a lot clearer by saying, its a public and progressive increase in prices. It occurs when the value of goods rises faster than the value of money. The customary approximate measure of this is the Consumer Price Index, which weigh the prices of different goods according to splendor in a typical budget and then shows how much the prices of these goods restrain increased. This immediately raises some problems for example, the weight of the goods must change over time. The brilliance of computers was non measured in the price index 100 days ago. Another problem is the failure of the price index to capture changes in q uality. The quality of a good may have improved by 20%, era the price has only risen by 10%. The consumer price index doesnt feel this should be a factor, only when many would disagree. Hence, inflation is not easy to define in practice. This should be kept in mind when discussing how to defeat inflation. There have been many theories on how to defeat inflation and withal some theories on whether, or not, it should be defeated at all. Some say that inflation is not only expected, but often, needed. Economists believe that in order for the economy to put out and grow, there has to be some level of inflation.Therefore, the opposite holds true as well. If you want to lower inflation, you have to accept a semi-standard economy. They call this trade-off the Phillips Curve. The Phillips Curve is thought to be the proper way of balancing frugal growth and inflation. For this reason the Federal Reserve is always looking for the unadulterated equilibrium at which we can maximize our economic growth while keeping inflation as minimal as possible. They do this by increasing and decreasing interest rate. Although, Economists and the Federal Reserve abide by the Phillips Curve as a general rule for not let inflation get out of hand, it has been proven many times in the past that it is possible to have a very healthy and well-disposed economy without raising inflation at all. There are even exa... ...creased. This would show a truer relation of the prices of goods to the inflation of the economy. I can await the Federal Reserves reasoning behind raising interest rates to slow down the economy and lower inflation, but they need to hear that the rate of inflation is not completely dependant upon the rise and illume of the economies well-being. The past has proven to us numerous times that the economy is instead capable of being stable and prosperous without effecting the inflation rate in a negative way. Thats why I feel that it would be in the nations best inte rest to continue letting the economy puff up into bigger and better things without raising interest rates to unneeded proportions. working CITED Forbes, Steve. Bad Idea Begets Bad Economy. Forbes. Oct. 9, 1995 p23. Dentzer, Susan. Honey, I Shrunk the Price Tag. U.S. News & beingness Report. Sept. 23, 1996 p72. Forbes, Steve. Stop Stunting Our Prosperity. Forbes. Oct. 16, 1995 p27. Inflation. Hypertext Webster Gateway. Jan. 20, 1999 internet. http//work.ucsd.edu5141/cgi-bin/http_webster?inflation Bootle, Roger. Chapter 2-Prices. The Death of Inflation. Nicholas Brealey Publishing. 1996 p488-489.