Macroeconomics – Inflation

During World War II, you could buy a loaf of bread for $0.15, a new car for less than $1,000 and an average house for around $5,000. In the twenty-first century, bread, cars, houses and just about everything else cost more. A lot more. Clearly, we’ve experienced a significant amount of inflation over the last 60 years. So I chose the topic of inflation for my essay because the problem of inflation is very relevant today and the fight against rising inflation – the main issue on the agenda of the governments of almost all developing countries in the world, including Russia. The attitude of the leading organizations in our country (government, central bank) to the topic of inflation is not unique. According to the government and the Central Bank, inflation is enemy number one for the Russian economy, but is that so? Inflation – this is a complex multi-process, causing serious damage to the economy of the country and its people. Inflation is now more or less covers almost all the countries in the world. Struggle with it for the purpose of reducing or total destruction requires great effort and expenditure. But on the other hand there is an opinion about its usefulness and necessity.

Thus, according to social studies, anti-inflationary policy is a myth, because there is no economy without inflation. Inflation – is the environment in which the economy develops, and this redistribution mechanism associated with cash handling. A lot of talk about inflation and a lot of writing, but do not always come to a consensus. What is the cause of inflation? Why is it that the rate of decline, the rise? What causes it determined? How does it affect your standard of living? Currently, inflation – one of the most dangerous processes, negatively impacts on the finances, monetary and economic system as a whole. The rise in prices may occur due to the state budget deficit, the lack of a pure free market of dangerous inflationary investment, inflation expectations, etc. It is important to note that inflation is based on not one but several interrelated causes and manifests itself not only in raising prices. By its nature, severity, manifestations of inflation is quite different and can be expressed also in short supply, deteriorating product quality. of inflation economically painful and dangerous, negative; they impact on finances, monetary and economic system as a whole.

There are open (creeping, galloping, hyperinflation), and suppressed, expected and unexpected, balanced and unbalanced, inflation, demand-pull and cost-push inflation. But, whatever the price increase, it always entails a number of socio-economic impacts, such as depreciation of monetary savings of the population, the uneven growth of prices, reduced investment in the economy and increase their risk, the active development of the shadow economy, reduced purchasing power national currency is inversely proportional to the rate of inflation and unemployment, etc. In a developing economy, we need to control inflation and achieve reasonable growth rates, and thus learn how to manage such a “painful” process for the country. This is the main purpose of anti-inflationary policy of the state. Many economists and politicians are fighting over these issues, but they all agree on one opinion( and I absolutely agree with them) – as inflation is a monetary phenomenon and the government, either directly or indirectly, has control over the money supply, then it follows that all inflationary episodes are caused by government. So the government must do everything necessary so that inflation does not exceed the permissible limits.