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Negative effects of inflation on the economy
Negative effects of inflation on the economy
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Inflation and Its Effects on Investment
For world economic markets, inflation is a fairly new experience as for much of the pre-twentieth century there had been little upward pressure on prices due to gold and other metallic standards. These backed currencies limited governments’ abilities to create new money. So at the end of the gold standard strong political pressures often caused governments to issue more money increasing the money supply and therefor the price level.
Inflation reflects a situation where the demand for goods and services exceeds their supply in the economy(Hall, 1982). Its causes could be triggered by the private sector and the government spending more than their revenues, or by shortfalls in output. Price increases could also be triggered by increases in costs of production. For instance increases in prices of imported raw materials will cause inflation if not managed. Whatever the initial cause, inflation will not persist unless accompanied by sustained increase in money supply. In this sense, inflation is a monetary phenomenon.
But what effect does inflation have on the economy and on investment in particular? Inflation causes many distortions in the economy. It hurts people who are retired and living on a fixed income. When prices rise these consumers cannot buy as much as they could previously. This discourages savings due to the fact that the money is worth more presently than in the future. This expectation reduces economic growth because the economy needs a certain level of savings to finance investments which boosts economic growth. Also, inflation makes it harder for businesses to plan for the future. It is very difficult to decide how much to produce, because businesses can...
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...hem to make financial decisions. If people cannot trust money then they are less likely to engage in business relationships. This results in lower investment, production and less socially positive interactions. Among other effects, people may start to attempt to trade by other, less efficient, means in order to avoid the unpredictable price levels due to inflation.
Bibliography
Blume, Marshall. Inflation and Capital Markets. Ballinger, Cambridge, 1978.
Hall, Robert ed. Inflation, Causes and Effects. University of Chicago Press, Chicago, 1982.
Hellerstein, Rebecca. “The Impact of Inflation,” Regional Review, Winter 1997, Vol. 7, No. 1.
Massimo, Caruso. “Investment and the Persistence of Price Uncertainty,” Research in economics, Vol. 55, June 2001.
Morley, Samuel. The economics of Inflation. Dryden Press, Hinsdale, Ill., 1971.
Money makes exchange much easier, because people can trade their goods for money and use the money to buy other things. In the Bible money was silver or gold, a precious metal, and America was on a gold standard throughout most of her history. In 1933 we shifted to a silver standard and in 1968 our silver certificates were replaced with Federal Reserve Notes (Remy, 2008). Today’s paper money is not backed by anything except the government’s promise that it is good. Money with no precious metal backing allows the central government to spend more than it collects in taxes, because the Federal Reserve Board can print new money, thus increasing the money supply, anytime there is a need. This is what causes inflation and is one way that the Federal Reserve Board has overstepped Biblical principles in economic policy. Greg Anthony writes that “one of the Biblical signs of a nation backsliding is the condition of its currency and the degree of honesty in its weights and measures” (Anthony, 1988, p. 28). When the money supply is increased, either through printing more money or credit-expansion, the purchasing power of the dollar falls, and businesses must increase the prices they charge to keep up with their own higher costs. Inflation encourages debt, deceives people about pay increases and future wealth accumulations, is a hidden theft tax, and decreases capital available for
Auerbach, N. A. and Skal, D. J. Bram Stoker: Dracula: Authoritative Text, Contexts, Reviews and Reactions, Dramatic and Film Variations, Criticism. New York, W. W. Norton & Company, 1997.
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The term “gamer” tends to be synonymous with “geek” in many people’s minds. They see gaming as a device that absorbs the majority of the time of the user, leaving them as mindless empty, pale husks with no ambitions other than beating that next boss or shooting the enemy in the face. However, few gamers waste their life away. On the contrary, many of these so-called geeks tend to be more social than the average person, and farther down the technological curve than most. For the truth is that gaming is a rather useful and beneficial hobby. It gives people an outlet to focus on, and can connect them with many others worldwide. It can teach and entertain at the same time, and can be a useful distraction at other times. In this essay then, closely examining the gaming hobby in comparison to other methods of entertainment will show that gaming is obviously the better method for using free time and connecting people.
This source mainly focus on the way video games work and how it is impact the people. Video games have advanced massively over the decades. Technology has spread its tentacles all over the place and has bestowed a lot of gifts to us and video games are one of them. The most up to date video gaming consoles are as effective as computer games, and can perform a large number of the same things. Moreover, today’s games are progressively practical and innovatively progressed. They are
Stuart, Keith. “The Seduction Secrets of Video Game Designers | Technology | The Observer.” Latest News, Sport and Comment from the Guardian | The Guardian. The Guardian, 14 May 2011. Web. 01 Nov. 2011.
Based on theoretical analysis on connecting video game proficiency with that of general expertise, this paper attempts to define the professional video gamer as an expert in the field of video games as well as reveal the growing community revolved around it. The main focus discussed is the differences in novice and expert as presented by the professional gamer known as “Shing07luvsic”. Additionally, using his terminology this paper looks to link the expertise characteristic as specified by the research literature, “Experts notice features and patterns.”, with that of Shing07luvsic’s competitive play.
Before starting to explain inflation it is necessary first to define it. Inflation can be described as a positive rate of growth in the general price level of goods and services. It is measured as a percentage increase over time in a price index such as the GDP deflator or the Retail Price Index. The RPI is a basket of over six hundred different goods and services, weighted according to the percentage of how much household income they take up. There are two measurements of this: the headline rate (includes all the items in the basket) and the underlying rate (RPIX) which excludes mortgage interest payments. It is the RPIX which is used more often in this country, as a feature of the UK when compared to the rest of Europe is a very high proportion of owner/occupier homeowners. This means that many people have mortgages, and as such, changes in interest rates (to control inflation) can artificially raise the headline rate.
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(Peyni, 2012) stetis thet “Ditirrinci thiury cen bi trecid tu Ciseri Bicceroe’s On Cromis end Panoshmints, e wurk thet meny hevi difonid es thi fuandetoun uf thi clessocel schuul uf cromonulugocel thuaght” (p.439). Besid un thos thiury, thiri eri thrii crotiroe thet mast bi mit fur thi panoshmint tu bi
Bradford, S. and Crowe, N. How gaming is all work and no play [2006]. (Online) Available from: Bbc news [Accessed 18/08/2010]
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Palmer, D. (2012, June 12). The Serious Business of Games. CIO Journal. Retrieved February 20, 2014, from http://deloitte.wsj.com/cio/2012/06/12/the-serious-business-of-games/
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