One thing we learned about in microeconomics is inflation, specifically causes for inflation. The main cause of inflation is the mismanagement of the money supply. This can be accidental or intentional, but either way causes inflation. It can be very simply fixed by making good decisions financially and managing the money supply better. This can be done by the central bank influencing interest rates, printing money, setting reserve requirements, buying and selling bonds, and open market operations. Another cause for inflation is the demand pull, which is when the demand outweighs the supply, causing an increase in demand, meaning higher prices. An example is when World War 2 ended, and all the troops came home to get married, have kids, spend a lot of money, and get jobs. The demand for a lot of things went up, thus so did the price. The last thing that causes inflation is cost push, which happens when the cost of wages and raw materials go up, thus raising prices. This happens a lot with oil, transportation, and labor.
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Hello Natalee,
I found your post very interesting. “As Jimmy Carter found out, inflation, whether temporary or structural, is bad politics, espeiall when political margins are close.” (Galston, and Kamarck, 2022). I understand that politicans have some interest in keeping inflation moving. Whereas there is a counter to that as well specifically as far as politicians staying in power. This is mostly due to most individuals believing that inflation is major concern, especially in American politics.
References
Galston, W. A., & Kamarck, E. (2022, March 09). Inflation politics is clearer than inflation economics. Retrieved from https://www.brookings.edu/blog/fixgov/2022/01/14/inflation-politics-is-clearer-than-inflation-economics/