Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 32: Q. 19. (page 782)

Is inflation likely to be a severe problem for at least some high-income economies in the near future?

Short Answer

Expert verified

High income economies doesn't impact severely due to inflation in near future.

Step by step solution

01

Step 1. Meaning of inflation.

A general progressive increase in the prices of goods and services in an economy is known as inflation. It causes the purchasing power of money to decline.

02

Step 2. Explanation

Inflation can disrupt the economies of many countries by quickly wiping out the value of money in the country. But this inflation doesn't impact severely to high-income economies shortly because:-

a) High-income economies will index the wage levels and interest rates to inflation.

b) Their central bank can control inflation in the medium and the long term.

c) They have learned that inflation has no long-term benefits but potentially substantial long-term costs if distracts businesses from focusing on real productivity gains.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Why are inflationary dangers lower in the high-income economies than in low-income and middle-income economies?

Retrieve inflation data from The World Bank data base (http://databank.worldbank.org/data/home.aspx) for India, Spain, and South Africa for 2011–2015. Prepare a chart that compares India, Spain, and South Africa based on the data. Describe the key differences between the countries. Rank these countries as high-, medium-, and low-income. Explain what is surprising or expected about the data.

Show, using the AD/AS model, how governments can use monetary policy to decrease the price level.

What are the different policy tools for dealing with cyclical unemployment?

What are the major issues with regard to trade imbalances for the U.S. economy?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free