Why is inflation bad for the American economy? Imagine going into the popular local food market or gas station several times a week. After a couple of weeks, imagine going into these stores and noticing the prices have steadily increased over the past few months. This is called inflation, and it is causing many problems in the United States. There are three different types of inflation: demand-pull, cost-push, and built-in.
FAO Food Price Index: February 2007 - January 2008 Source FAO, 2008 In this project, we attempt to find out the causes for this price rise, the trends of the rise and the effects that this rise has had on us. Causes: 1. High demand for food in developing countries: The growing world population is demanding more and different kinds of food. Rapid economic growth in many developing countries has pushed up consumers' purchasing power, generated rising demand for food, and shifted food demand away from traditional staples and toward higher-value foods like meat and milk. Meat also consumes food resources in a shockingly inefficient way: it takes 8kg of grain to produce 1kg of beef, and 4kg for pork.
For example, the decline in water supply in the “Nile Valley” made the countries competing on the Nile water which put lots of pressure on Egypt that its population expands 3% every year (Cassils 2004, 185). Other implication is the increase in Co2 emissions by 2.5% per year which driven by annual per capita GDP and annual population growth (Mitchell 2012). The technology used at the beginning of this century caused higher Co2 emissions in developed and developing countries which raise the consumption rate (Mitchell 2012). The human’s activities, technology, and industry in crowded cities change the climate and impose environmental disasters such as cyclones and floods (Mitchell 2012).
Goodwin, N , Nelson, J , Harris, J (2009). Macroeconomics in context. USA: M.E Sharpe, Inc.. 102-. HM Treasury . (27 March 2013-8 January 2014 ).
Over the years as flooding has increased planting and crop establishment has been delayed (US Global Change Research Program). Also flooding has changed the types of crops that can now be planted in the Midwest (Ben Chou). The extreme rainfalls and flooding have become more common over the past century and are expected to keep on increasing causing many harms for the Midwest including hurting agriculture (University of Michigan). The Midwestern United States has experienced flooding for a long time now, but recently the annual precipitation has been far greater than before. Precipitation has increased 37 percent since 1958 (Jeff Spross).
In the next 40 years the world’s population is predicted to rise to 9 billion, that amount of people living on this planet would put a lot of strain on the agricultural sector, there would be more demand for food and water. According to (Ryan, 2010) Agricultural land loss is a growing problem in most countries and across the globe as our world population increases. One of the major problem affecting the global food supply is global warming. Most people do not know what global warming is and the effect it’s having on our planet. Global warming is the increase in the average temperatures on our planet.
This increased the need for grain. Since there was more need for grain, the price increased in the market. In mid-September 2012 more than 65% of America was in drought but the most horrible drought in history is still in July 1934; around 80% of American was in drought. Having dust in the air as you breathe is also something very hazardous. The more dust, the more people had trouble breathing.
In this case, when the minimum wage is raised, employers need to pay more to prevent from losing their employees to their competitors, which puts great pressure on business owners. Furthermore, raising the selling price, the second way mentioned above for maintaining profits would have a great impact on consumers. For example, Meltzer and Chen (2011) emphasize that increasing the minimum wage would increase the price of fast-food and thereby decrease its consumption. Assuming the business owners do not fire their workers, they need to increase the selling price of their products or services to increase the revenue,