provide evidence of two countriesj that have used supply-side mesures to reduce inflation.?
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Most countries have adopted supply side economics for cetain periods - example during Prez Reagan's time (USA), Austria and UK (following Keyne's findings that public investment helped reduce inflation).\n\nSupply-side economics developed during the 1970s of the Keynesian dominance of economic policy, and in particular the failue of demand management to stabilise Western economies in the stagflation of the 1970s, in the wake of the oil crisis in 1973. [1] (Case & Fair, 1999: 780).\n\nIt drew on a range of non-Keynesian economic thought, particularly the Austrian school, e.g. Joseph Schumpeter and monetarism.
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In economics, inflation is an increase in the money supply or an increase in prices.\n\nThe two most obvious versions of this, each held by some economists to be "real" inflation, are for prices of goods and services in the currency in question to rise, or for the money supply to increase.\n\nPrice inflation is closely akin to "cost of living" measurement, where a "basket" of goods, and comparing the prices at two intervals, and adjusting for changes in the intrinsic basket. But, technically, this is not raw inflation; it is an attempt to determine real-life value of money compared to the members of the society in question, adding other factors like increased expectations.\n\nRaw inflation measurement does not adjust for expectations, but directly measures the change in the price of goods.\n\nThere are different measurements of price inflation, depending on the basket of goods selected. The most common measures are of consumer inflation, producer inflation and GDP deflators, or price indexes. The last measures inflation in the entire economy.\n\nGeneral price inflation is a fall in the purchasing power of money within an economy, as compared to currency devaluation which is the fall of the market value of a currency between economies. The extent to which these two phenomena are related is open to economic debate, though the comparison of a currency to foreign currencies is based on investor demand for currencies, and therefore must at least partially be a matter of perception.\n\nBoth of these are often caused by money being added to an economy, either as printed currency or as virtual money lent to banks or other entities. This is called currency inflation, and can cause price inflation or currency devaluation. But, because the general amount of wealth gradually changes in an economy (as long-lasting things are created, new technologies invented, et cetera), a small amount of currency inflation need not cause price inflation.\n\nSome terms related to inflation:\n\ndeflation is a rise in the purchasing power of money, and a corresponding lowering of prices (the opposite of inflation). \nDisinflation refers to slowing the rate of inflation, that is, prices are still rising, but at a slower rate than before. \nReflation is a term used to denote inflation after a period of deflation, meaning inflation designed to restore prices to a previous level. \nHyperinflation is rapid inflation without any tendency towards equilibrium - that is, an inflation that produces even more inflation. \nIn some contexts the word "inflation" is used to mean an increase in the money supply, which is seen as a cause of price increases. Some economists (of the Austrian school) still prefer this meaning of the term, rather than to mean the price increases themselves. Thus, for example, some observers refer to inflation in the 1920s in the United States even though the prices of some baskets of goods were not increasing at the time. The word "inflation" will be used to refer to a general increase in prices unless otherwise specified.\n\n\nEconomic role\n\nOne effect of small steady inflation is that it is difficult to renegotiate some prices, and particularly wages and contracts, downwards, so that with generally increasing prices it is easier for relative prices to adjust. Many prices are "sticky downward" and tend to creep upward, so that efforts to attain a zero inflation rate (a constant price level) punish other sectors with falling prices, profits, and employment. Thus, some business executives see mild inflation as "greasing the wheels of commerce". Efforts to attain complete price stability can also lead to deflation (steadily falling prices), which can be very destructive, risking bankruptcy for companies that do not react, ultimately resulting in recession (or even depression).\n\nMany in the financial community regard the "hidden risk" of inflation as an essential i
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It is impossible to disagree with this analysis.  Just look at the economy under Carter in the 1970s.  When the top tax rate was at 70%, we had rampant inflation, high interest rates, and record unemployment.  All of this was a direct result of the out-of-control tax hike.  Businesses, having to pay exhorbitant taxes, passed this expense on to the consumer causing high inflation and thus lowering the value of the dollar.  The fed raised interest rates to slow the inflation, causing home ownership to be out of reach for more Americans.  Businesses could not afford to hire more employees because the money that they would have paid them with was going to the government in taxes.
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Inflation is caused by the increase in the cost of goods and services. Inflation that is caused artificially, like the price of crude oil, can only be stopped by taking away the oligopolistic profits the sellers make. Inflation caused by true scarcity cannot be cured.\n\nSo far, this (USA) country's only answer to inflation has been to increase the cost of borrowing money, which seems crazy, since that makes prices go up also. I guess you have to have a degree in economics to understand why stupidity works.
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That's because of rising inflation and interest rates.
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The Federal Reserve has the power to mitigate the effects of inflation by adjusting its monetary policy. For example, they can sell government securities and raise interest rates (which would decrease the money supply, thus curbing inflation).
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False: the CPI is (at least supposedly) a measure of the inflation rate. It has been at or about 3% since it has been calculated.\n\nThe "supposedly" is to point out that many economists believe that the CPI is a flawed measure of the actual inflation rate, as it overstates the actual amount of inflation for most goods. The GDP deflator has been suggested as an alternative, but it tends to understate inflation, so a better alternative would likely be a retooled CPI.
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Currencies are based on purchasing power, and interest rates in nations. If there are high interest rates that exsists in say the U.S. and low interest rates in Japan the exchange rates will move in the favor of the U.S.  If inflation is high in the U.S. compared to Kenya the U.S. dollar will fall to the shilling. To maintain equal purchasing or investing power between the two nations. This happens because in a free market world economy the prices of all similar goods and services will have very similar if not the same prices.
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Yes there has.  Due to the falling price of wholesale crude on the international commodities market, OPEC announced an intent to cut back production of crude.  Further, as we head into winter months, heating oils and diesel fuel (for shipping of goods) has a spike in consumption.\n\nWhat this means is the volatility of the crude, fuel, gasoline, and heating oil markets are directly effected by the speculators on the market itself.  What you are seeing is a market response to speculator manipulation of the price.  It has nothing to do with the elections, just brokers and individual investors trying to make a quick buck.\n\nThe best response to this would be a massive investment in the ability of the US market to refine a greater quantity of our imported crude, and to explore even greater quantities of crude from domestic sources.
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Inflation/Deflation, Supply/demand and umm the crazy graphs and curves of demand, supply etc
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See for yourself.\n\nhttp://sparknotes.com/economics
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We have been doing this since we de-coupled the dollar from gold in 1971.  Actually, to be accurate, the private bank called the Federal Reserve has been doing this.  When they set interest rates low, more dollars are borrowed, meaning more dollars are needed to be put in the system, so they order it up from the Treasury and print away.\n\nIf you compare the price of precious metals and real estate, two items that have fixed "value" unless something big and artificial happens to them, then you will notice that they have increased in value almost 1.5x since Bush took office.  We have had inflation of nearly 50% in the last 4-5 years.  The Fed stopped making public knowledge the M3 indicator two months ago, which is the number of dollars in circulation in the world.  This was another trick to curb inflation...if nobody knows how many dollars there are, they can't adjust the rate of exchange based on any hard number anymore.
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Government spending puts more money in the economy . . . but tht doesn't NECESSARILY have an eefect on inflation.  Government BORROWING (i.e. deficit spending) does create inflationary pressures.
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According to popular thinking a widening in the balance of payments deficit raises the demand and lowers the supply of foreign currency and this leads to depreciation of domestic currency.\n\nThis theory suggests that if local prices are going up, for whatever reasons, this gives rise to more imports and fewer exports i.e. the widening in the balance of payments deficit. In other words if rises in domestic prices exceed rises of prices abroad, other things being equal, this will cause balance of payments deficit and domestic currency depreciation.\n\nThe Austrian School, led by the late economist Ludwig von Mises, however, holds that this cannot be so. As long as the money supply is not expanding peoples monetary income will not increase. Consequently they would be forced to restrict their consumption either of imported or domestic products in response to price rises. In the first case imports will drop and in the second case exports will increase. Thus the balance of payments will be brought to a �favourable� state.\n\nThe Austrian view holds that the exchange rate of a currency like the price of any other good is determined by its relative scarcity in relation to the demand to hold currency. Just like any other good, both supply and demand determine the price, or the exchange rate of a currency. According to Mises the rate between two currencies will tend to equal the ratio of their purchasing power. In other words it is the relative purchasing power that determines the currencies rate of exchange.\n\nFor the mainstream economics the purchasing power of money is the inverse of a price level depicted by a price index. Mises however, showed that the price level and general purchasing power of money cannot be quantified. He showed that the purchasing power of money is an array of specific goods. As an example the purchasing power of one dollar is one kg of potatoes i.e. one dollar buys one kg of potatoes, or half a kg of tomatoes.\n\nIn short the price or purchasing power of one dollar is an array comprising of one kg of potatoes and half kg of tomatoes. However, tomatoes and potatoes are not commensurable. This means that we can only quantify the purchasing power of a dollar with respect to specific goods and not for total goods.\n\nNow, since price level is the inverse of the purchasing power of money it follows then that it cannot be also established. According to Mises various price indices that are employed have nothing to do with price levels and their use leads to erroneous analyses.\n\nFurthermore, mainstream economists fall into the trap of comparing prices of supposedly identical goods in various locations as a proof that the purchasing power of money in the real world differs in different markets at the same time. However, the value of goods is not only determined by their physical appearance but also by their location. Thus a hamburger sold in New York is a different product from a hamburger sold in some remote village in the Sahara desert. For the first is a hamburger in New York while the second is a hamburger in the Sahara desert village.\n\nAccording to Mises as long as the exchange relations exist between two different currency areas, economically the money of one area necessarily functions as the money of the other area, since both moneys must be utilised in effecting an exchange between the two areas. Consequently the purchasing power of currencies is established with regard to a good in the same location.\n\nThus the purchasing power of the German mark and the purchasing power of the US dollar are all established with regard to the same good in the same location. If one loaf of bread in New York is sold for two marks or one dollar then the rate of exchange between the mark and the dollar will be 2:1 (two-to-one). If the rate of exchange differs from this ratio it will set an arbitrage activity until the rate of exchange will adjust towards the ratio of prices.\n\nThus if the exchange rate is 3:1 this mea
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Trading in the currency of other countries.
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Check www.inflationdata.com and look up the Consumer Price Index Historical data.
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idea 1: inflation has an "invisible hand" to control it...ie when inflation devalues the american dollar to a certain point; people spend substatially less money on luxuries, and luxury item companies react and make their product more affordable...which is reflected in a sort of ratio of cost between necessities and luxuries and whatever falls inbetween...  now idea 2: we, as a nation, expect unemployment.  we have a certain, budgeted amount of money set aside to compensate for that.  Now lets assume two things...1 - that idea 1 is true and that idea 2 is true.  2 - that in the instance that this original question is posed, neither inflation nor unemployment is so out of control that it is causing "economic anarchy"  Assuming all of this... it would make it more important to control inflation because it is not prepared for in the same way that unemployment is...plus (as a side note, and you thought i was done...) inflation causes each dollar to be worth less money...therefore, theorhetically, people are recieving smaller paychecks...and it leads some to get secondary (or even tertiary) jobs or to work additional hours, which begins to take up hours that are availible from employers...and when companies move less product, they have less hours of work to provide to those that work for them....think about it...