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a)Why should every government be concern with inflationary pressure?

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Issue:

Social Issues

 

Written by:

Sarah A

 

Date added:

June 20, 2012

 

Level:

University

 

Grade:

A

 

No of pages / words:

2 / 499

 

Was viewed:

4578 times

 

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Essay content:

As a result, they can only purchase fewer goods and services than before. Also, the persistent increase in prices will lead to an increase in the cost of living. Assuming ceteris paribus, living standards will be lowered since luxuries have to be given up to pay for the basic necessities. When prices change rapidly and in an unpredictable manner, both consumers and producers will find it difficult to calculate relative prices necessary for their rational decision making process...
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The different rates of changes in prices will result in changes in relative prices and this may lead to inappropriate production and consumption decisions, hence a misallocation of resources. For example, inflation may cause some business firms to mark up their prices by more than what is necessary to compensate for the increased risks they perceive...
displayed 300 characters

General issues of this essay:
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