Short Response Essay on The inflation spiral faced by America

This essay is a response to a video of on American Economics. The instructions for the essay were as follows:

1st PAGE has to be the synopsis, in other words explaining the video.
2nd PAGE needs to answer the question.
The question:
If we(US) were experiencing a inflationary pressure on top of all the other problems we have, what would be your solution(or policy) and why?

About the Solutions
The entire solution is reproduced below. Please purchase the solution if you wish to use any part of it so that the writer can get his due. You can also use our services to hire someone to work on your essay or any other class project.

Inflation: How Did the Spiral Begin?

The inflation spiral faced by America comes as a result of many different decisions taken over a number of years from various governments. For example the LBJ administration did not raise taxes when appropriate since that is always an unpopular measure. However, not taking that measure led to more money being put in the economy along with the large expenditure on the Vietnam War. This only served to increase the inflation level and senior citizens as well as other individuals living on a fixed income started feeling the pressures of inflation. Not raising taxes was another popular decision taken by Nixon but the results were the same as in prices continued to rise which only increased the cost of living.

It seems that inflation is created when a growing economy has to battle with increased demand for the same number of goods and services in a given economic system. The controlling of supply and demand can both be used to help in curbing inflation but at times the market is too strong to be controlled by simple measures. For example, Nixon imposed a price and wages freeze across the country for 90 days but as soon as the freeze was over, prices shot up and inflation was let loose.

From the experiences of LBJ and Nixon, it seems that the two tools which the government has to control inflation is taxation and controlling the interest rate in the economy. While the government may consider increasing taxes to be a dangerous and unpopular decision, controlling the monetary supply of the economy can be done with the control over interest rates that are indirectly regulated by the Federal Reserve Bank.

However, this can be a dangerous step since controlling the money supply can bring about a slowdown in the economy and even push a country towards recession when financiers become hesitant to invest in long term securities. Further, higher interest rates can also affect the economy negatively as well as society negatively since unemployment could be increased if businesses do not have access to easy money. At the same time, controlling the interest rates by increasing interest rates, i.e. the cost of money, would be the best solution for controlling inflation.

Thus it is entirely possible to control inflation for a given economic system but that demands careful planning and the making of some unpopular decisions that can backfire for a government that is seeking reelection. Undoubtedly, economic systems are complex and the sheer size of an economy like America can have a global impact if the American economy is performing poorly. However, inflation is certainly something which governments will seek to avoid as much as they can but more often than not, the decisions and the actions taken by governments promote inflation rather than curb it. While it is easy to say that a good president or a strong decision maker would take the steps required to stop and reverse the path of inflation, it is more than likely that the decisions made by the government would focus on the present rather than look towards the situation as it may develop in the future.

Other Details about the Project/Assignment
Subjects: Economics
Topic: Short Essay on The inflation spiral faced by America
Level: College / University
Tags:

Short Response Essay, inflation spiral, American economy

Price: $1.95

Purchase and Download Solutions

Created By

Mike Carver
	Member Since: March 2006 Customer Rating: 95.4% Projects Completed: 759 Total Earnings: *Private* +1 Ratings from clients: 178

Project Details

Subjects: Economics
Topic: Short Essay on The inflation spiral faced by America
Level: College / University
Tags:

Short Response Essay, inflation spiral, American economy

Customer Reviews

Reviewed 2 Times
Rating

( 4.5 / 5 Stars)
(Click here to read more reviews)

Reviews of these solutions by others
No customer has left a review for these solutions. Be the first one to purchase them and leave a review for others.

Not exactly what you are looking for?
We regularly update our homework solutions library and are continually in the process of adding more samples and complete homework solution sets. If you do not find what you are looking for, just go ahead and place an order for a custom created homework solution. You can hire/pay a homework expert to do your homework for you exactly to your specifications.

Hire/Pay an expert to do your class assignments, homework or online exam

Hire/Pay an expert to do your class assignments, homework or online exam

Short Response Essay on The inflation spiral faced by America

Short Response Essay, inflation spiral, American economy

Short Response Essay, inflation spiral, American economy