24 Jun, 2009
anti inflation methods decreaseing inflation inflation methods to decrease inflation
Anti inflation Methods
A) Measures to reduce excess aggregate demand:
- Rigorous monetary policy, such as to avoid excess money in the economy;
- Budgetary policy of the State towards reducing the budget deficit, to maintain a level of public spending, period, and for clearance, within certain limits, the level of taxes, to curb rising demand and prices;
- The interest on loans, which do not reach an artificial decrease in interest rates and credit ieftinirea;
B) Measures to stimulate the increase:
- A wage policy correlated to economic results obtained by working through that to avoid increasing the average cost;
- Increasing adaptability of the production to market requirements;
- Stimulating the expansion of production potential through capital investment in the means of production performance, the employment structure in a qualifying new innovations, increasing productivity of factors of production.
24 Jun, 2009
inflation monetar monetary inflation
Monetary inflation means the currency by excessive issue of currency supply over real goods and services.
This draws an excess demand for commodities leading to higher prices. Raising prices is not simply increasing the amount of money, but the demand which it makes possible.
Monetary inflation is well defined by the equation of exchange Fisher M * V = P * T
where: Broad money-M V-speed movement of the
P-The general level of prices T-volume transactions.
So you can see that if M (money) is greatly increased causing a major imbalance in that equation can not be brought to normal only by increasing of P (the general level of prices). Say this because:-T (the volume of transactions) can not increase more than the maximum we allow production – V (velocity of circulation of money) is not easily changed because they are difficult to change: the tastes, habits and consumer preferences .
24 Jun, 2009
inflation Money volume of transactions what is inflation
Inflation means the currency by excessive issue of currency supply over real goods and services.
This draws an excess demand for commodities leading to higher prices. Raising prices is not simply increasing the amount of money, but the demand which it makes possible.
Monetary inflation is well defined by the equation of exchange Fisher M * V = P * T
where: Broad money-M V-speed movement of the
P-The general level of prices T-volume transactions.
So you can see that if M (money) is greatly increased causing a major imbalance in that equation can not be brought to normal only by increasing of P (the general level of prices). Say this because:-T (the volume of transactions) can not increase more than the maximum we allow production – V (velocity of circulation of money) is not easily changed because they are difficult to change: the tastes, habits and consumer preferences .
