Inflation :: essays research papers

INFLATION      In the 1970s the prices of most things Americans buy more than doubled. such(prenominal) a general increase in prices is c bothed inflation. Prices of selected goods may increase for reasons uncorrelated to inflation the price of fresh lettuce may rise because unseasonably fundamental rainfall in California has ruined the lettuce crop, or the price of flatulence may rise if the oil-producing countries set a higher price for oil. During inflation, however, all prices tend to rise. Over the last 400 familys there puddle been many periods of inflation. In the 16th century, when the Spaniards began bringing back gold and notes from the New World, prices in Western Europe moved upward as the supply of money change magnitude. During the 19th century prices tended to go downward as food and raw materials became cheaper. After major wars such as the Napoleonic Wars and World Wars I and II, prices again moved upward. In the 1950s and 60s a so-called creeping inflation occurred, when the general price level in the fall in States and Western Europe rose by an average of 1 to 5 percent each year. In the 1970s inflation increased until it reached as much as 13 percent a year in the United States. Many countries have suffered from inflation more than has the United States. Israel had inflation of more than 100 percent a year in the early 1980s, meaning that the cost of living more than doubled any year. In Argentina inflation was greater than 400 percent in 1975 and averaged more than 100 percent each year from 1976 to 1982. The most notable inflation in modern times was the German hyperinflation of 1923, when people went to the cut in with wheelbarrows full of money to buy a few groceries. A identical hyperinflation occurred in Hungary later on World War II. Inflation has been defined as "too much money chasing too few goods." As prices rise, reinforcement and salaries also have a tendency to rise. More money in peop les pockets causes prices to rise still higher so that consumers never quite transfix up. Inflation can go on continuously year after year so long as the money supply continues to increase. go along inflation affects people in diverse ways. Those who live on heady incomes, or those whose incomes increase very slowly, suffer most from inflation because they are able to buy less and less. Those who lend money when prices are light may be paid back in dollars of reduced purchasing power.