Inflation :: essays research papers

rising prices      In the 1970s the prices of most things Americans buy more than than doubled. Such a general increase in prices is called pomposity. Prices of selected goods whitethorn increase for reasons unrelated to swelling the price of fresh lettuce whitethorn swot up because unseasonably heavy rain in California has ruined the lettuce crop, or the price of gasoline may rise if the oil-producing countries set a higher price for oil. During pomposity, however, all prices pitch to rise. Over the last 400 course of studys there have been many an(prenominal) periods of lump. In the 16th century, when the Spaniards began bringing back gold and silver from the wise innovation, prices in Western Europe moved upward as the supplying of money increased. During the 19th century prices tended to go downward as fodder 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 linked 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 aboriginal 1980s, meaning that the cost of living more than doubled every 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 remark commensurate inflation in modern times was the German hyperinflation of 1923, when people went to the store with wheelbarrows profuse of money to buy a few groceries. A similar hyperinflation occurred in Hungary after World War II. lump has been defined as "as well much money chasing too few goods." As prices rise, wages and salaries overly have a te ndency to rise. More money in peoples pockets causes prices to rise still higher so that consumers never quite catch up. Inflation can go on continuously year after year so long as the money supply continues to increase. Continued inflation affects people in diverse ways. Those who live on fixed 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 lower may be paid back in dollars of reduced purchasing power.