A phenomenon of rising prices economics essay

By understanding the real root causes driving the oil prices in the world, researchers will be able to understand the fundamentals behind the volatility of oil prices in the turbulent economy environment today.

A phenomenon of rising prices economics essay

Which of the two is better: Inflation is a phenomenon of rising prices without causing change in the levels of employment and output. Deflation, on the other hand, is a phenomenon of falling prices accompanied by a fall in the levels of employment and output. Both inflation and deflation are harmful for society and have undesirable economic consequences.

But when the question of a choice between the two evils of inflation and deflation arises, the lesser evil is to be selected. Inflation is the lesser evil. Thus, inflation is preferred to deflation because the former is lesser of the two evils. In the words of Keynes, "Inflation is unjust and deflation in inexpedient.

Of the two deflations is worse. Inflation redistributes income in favour of the rich profit earners at the cost of the poor wage earners and consumers. It transfers purchasing power from poorer to the richer sections of the society and thus widens the gap between the rich and the poor.

A phenomenon of rising prices economics essay

It adversely affects those who are already weak and cannot protect themselves. It specially hits the middle classes who suffer most during inflation. It takes away wealth from some groups of the society and transfers it to others arbitrarily, ignoring the maxim of equity.

It encourages the spirit of gambling. It promotes speculative activities and diverts business skill and efficiency from productive to speculative activities.

Deflation is Inexpedient Deflation, is considered inexpedient because of the following reasons: It goes on gathering momentum and the economic crisis becomes deeper and deeper with the passage of time.

It adversely affects the social, economic, political and moral life of the economy. It curtails economic activity, causes mass unemployment, generates poverty and ultimately results in the complete ruin of the economy.

Inflation is Better than Deflation Though both inflation and deflation have undesirable effects, but inflation is considered better than deflation.


The following arguments justify the preference for inflation. Deflation, on the other hand, has the undesirable effect of reducing national income.

In other words, during inflationary phase all factors of production are employed in some way or the other, whereas, during deflation, the problem of unemployment becomes more and more acute. Once deflation starts, it gathers momentum and the cumulative downward process ultimately takes the economy into severe depression.

During depression, the marginal efficiency of capital declines and the businessmen become pessimistic about the future of their investments.

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Under such conditions, monetary and fiscal policies become ineffective; they cannot restore the confidence of the entrepreneurs and compel them to increase investment.In economics, inflation is a sustained increase in the price level of goods and services in an economy over to a rise in the price level.

An increase in the money supply may be called monetary inflation, to distinguish it from rising prices, which may also for clarity be called "Inflation is always and everywhere a monetary phenomenon.".

Essay on Rising Prices Inflation – Essay 2 ( words) Introduction. When the prices of goods and commodities increase over a period of time in a sustained manner, the phenomenon is called inflation.

Below is an essay on "Inflation Economy Phenomenon" from Anti Essays, your source for research papers, essays, and term paper examples. Introduction Recent years witnessed a serious inflation economy phenomenon incurred in our country. Food prices have been rising since early 21 century and reach the peak value in because of higher energy cost, demand of biofuels, growing demand of people’s food as populations increase, and for livestock foods and natural calamities.

This phenomenon of rising prices is called inflation. While small changes in the price level from year to year may not be that noticeable, over time, these small changes add up, leading to big effects. As a phenomenon of rising Prices: Definitions given by the economists like Crowther, Gardner Ackley, and H.G.

Johnson regard inflation as a phenomenon of rising prices. According to Crowther, inflation is a "state in which the value of money is falling, i.e., the prices are rising.".

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