Essays on Cost Push Inflation

Inflation and Oil Prices

Inflation refers to persistent increase in the price level over time and is one of the most dangerous threats to an economy because if unchecked it will erode the purchasing power of a currency and if the monetary system of the country is destroyed, can ultimately force the individuals to adopt foreign currency.

There are two kinds of Inflation: Demand Pull and Cost Push Inflation.

Cost Push Inflation: A situation when inflation persists in the economy because of initial decrease in aggregate suppky caused by an increase in the real price of an important factor of production i.e wages and energy. Oil Crisis of 1970 is a suitable example of cost-push(supply shock ) ...

Answer 1)

The nightmares of global financial crisis began in 2007 and despite the efforts of central banks and policy makers to restore the economy, the crisis were intensified in 2008. The proven impotency of policy responses and multiple views of number of economists and analysts over causes of Financial Crisis, has raised the root causes of global financial crisis.

The Sub Prime Lending: The continued trend of increasing prices in housing sector because of excessive liberal and accomodative policy along with lax liberal standards during the period of 2002-2006, led to large issue of mortgage credit to households including ...

Introduction

India government spending has been increasing over years. Currently the country is experiencing a budget deficit of 4.3% of gross domestic product. Sizeable amount of the deficit is financed by borrowing internally, however considerable amount is also borrowed externally. The high budget deficit is attributable to increased spending on direct cash subsidies and weak economic growth outlook which does not allow the government to increase tax. The subsidies which have lately been increased are petroleum and food subsidies. On the other hand, the weak economic performance has been attributed to decreasing external and internal demand of India’s goods and ...

In this part of the paper the subject of the discussion will be the history and various causes of inflation. We will talk about the history of inflation, the factors which influence it, the mechanism of inflation and its effects, as well as the way government policies deal with inflationary pressures.

History of inflation

In the first step, it is important to discuss the history of inflation and the reasons for its existence. For centuries the problem of money supply increase appeared all over the world. Therefore, countries used to change the type of currency quite often. Thus, initially many countries used ...