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Essay / Research Paper Abstract
This 11 page paper looks at inflation; including what it is and how it occurs. The paper is written in three sections, the first section considers the alignment inflation rates with growth rates, the second section considers the way that a converse relationship may be seen, such as with stagflation. The last section discusses a potential link between real GDP growth and inflation rates. The bibliography cites 7 sources.
Page Count:
11 pages (~225 words per page)
File: TS14_TEinflation.rtf
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Unformatted sample text from the term paper:
that is used to assess the increase of prices or goods in an economy. Inflation is often seen as the result of any supply and demand economy. Supply and demand
are major determinates in the prices for products and services. Where supply outstrips demands the prices will fall until the level or demand increases and the market reaches equilibrium. Conversely,
where demand outstrips supply then the prices will increase until the market place reaches equilibrium. In reality the markets tend to remain in a state of flux, but it is
this levelling out the price changes reflect. Therefore inflation can be caused by excessive demand which results in prices increasing. The demand
may result from more spare money existing in an economy that is then used to purchase goods. It is for this reason that governments try to control or influence the
levels of pay rises given to employees by their employers as this places additional money in the economy which can give rise to these inflationary pressures. However, it may be
argued that there are many common misunderstandings regarding inflation and why it occurs. Therefore, it is important to look at the way
inflation may occur, including the different influences, and how it may increase and decrease inflation levels. In the first section of the paper we will look at the way that
inflation may be aligned to growth, increasing as growth increases and decreasing as growth decreases. However, this is not always the scenario, so in the second section the potential converse
relationship between growth and inflation will be considered. The last section will consider the often assumed correlation between the real GDP growth and inflation rates. 2. The Alignment of Growth and
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