" (2006) Boyd and Champ additionally state that: "The world has seen a dramatic decline in inflation rates in recent decades, but concerns about inflation may still be warranted, especially in some countries. Evidence is mounting that inflation is harmful to economic activity even at fairly modest rates of inflation because of the way it adversely affects the banking sector and investment." (2006) In the private sector "high interest rates have their most dramatic impact on equity investments - both stock market and private." (Understanding Inflation: So What's to Worry About, Anyway?, 2006) Additionally stated is that: "High interest rates show their effects by: (1) direct competitor for the investor's dollar. By increasing the difficulty of raising equity capital, high interest rates directly undermine financial stability and slow the growth of economic capacity needed to meet inflationary demand. They reduce price/earnings ratios; (2) High interest rates increase economic costs and risks for the individual business and the economy as a whole. In addition, high interest rates can obviously reduce incentives for long-term economic projects; (3) High interest rates reduce borrowing for consumption, production and investment purposes. Ultimately efforts to keep interest rates down by means of rapid money supply increases must lead to higher interest rates than would otherwise occur." (paraphrased; 2006)
III. HOW DOES THE FEDERAL RESERVE BOARD CONTROL INFLATION?
The Federal Reserve System's implementation...
U.S. Inflation: Causes, Cost, and Prevention The concept of introduction, loosely defined is a drop in the value of money, or the goods being purchased for a certain amount of cash now costs more in terms of cash. This causes discomfort to individuals as they feel that they are 'paying more' for the same item. What they often fail to realize is that the emoluments have also gone up, and thus
Grocery Store by Entrance of Hypermarkets in Bangkok Thailand Small grocery store owners in Thailand are faced with the ever growing threat of foreign -- owned hypermarkets. Hypermarkets are part of a global trend that threatens to destroy the small grocery store. If this trend continues the traditional market structure of Thailand might become obsolete in the future. This research explores strategies that small grocery store owners can employ to
The Federal Reserve should be able to control and measure the demand and supply on the market and correlate the two indexes. Also, and probably most importantly, the Reserve should constantly supervise and regulate the monetary system, assuring correspondence between the amount of money in coins and bills on the market and their coverage in gold and in the total quantity of goods and services produced. The economic practice has concluded
Conclusions There is no generally accepted theory of inflation. The causes that generate it are numerous and include economic, psychological, social, political, internal, and external factors. Inflation is based on numerous partial causes, which correlated determine the inflationist process. Inflation is generally considered an unbalance between money and goods, consisting in the existence of excessive money supply in relation with the volume of goods subjected to transactions, resulting an excess of unsatisfied total demand. Given the processes that determine
2.5. Limitations of the study At the level of the limitations, these refer to the usage of secondary information, as opposed to the collection of primary data through the direct analysis of the Chinese market. This limitation is nevertheless addressed through the integration of multiple sources of valid and verifiable information, leading as such to the creation of solid, relevant and reliable findings. The second limitation is one common to all research
" 2 Apr. 2004. Federal Reserve Bank of San Francisco. Retrieved November 21, 2006 from Web site: http://www.frbsf.org/publications/economics/letter/2004/el2004-08.html Ranson, David. "Inflation." The Concise Encyclopedia of Economics." Retrieved November 21, 2006 from Web site: http://www.econlib.org/library/Enc/Inflation.html Inflation." Wikipedia. Retrieved November 21, 2006 from Web site: http://en.wikipedia.org/wiki/Inflation#The_role_of_inflation_in_the_economy Svensson, Lars E.O., "Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others." Dec. 2003. Retrieved November 21, 2006 from Web site: http://www.princeton.edu/svensson/papers/jep2.pdf Inflation." Encyclopedia of American History.
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