Question

Go to the internet and find a news article published in 2018 that discusses changes in demand and supply of particular goods/services, summarize key points and post in the Discussions area.

Refer to week 2 content materials and use specific economic vocabulary within your summary, i.e. demand, quantity demanded, determinants of demand, shifts in demand curve, etc. Likewise with supply. Also you should discuss changes in equilibrium quantity and equilibrium price.

  The article you choose may not use these exact terms; therefore, it is incumbent upon you to convert the article language into economic language as is appropriate.

Answer 1

Below article is summary of acceleration of Inflation in Emerging Markets released In 2018.

Inflation in an economy is either caused due to an adverse supply shock or due to expansionary fiscal policy or expansionary monetary policy in continous terms.

In an adverse supply shock the total quantity of basic goods reduce drastically causing its aggregate demand to rise exponentially and hence push prices higher and gradually lead to inflation. In such diseconomies of scale is observed.

Also continous and eventual implementing of expansionary monetary or fiscal policy either through continous tax cuts or increasing government spending or decreasing interest rates, resulting into significant jump in aggregate demand and as consequence prices rise eventually causing situation for hyperinflation in the economy. This also causes increase in real GDP of the economy. Various tools in monetary policy framework are used to control inflation like the CRR ratio, Government securities, Interest Rates. To curb down recession, government use automatic stabilizer to boost economy as we saw in Global Financial crisis, which was also coupled with Quantitative easing program .