In some cases, it could be defined as falling prices and substantial unemployment. Also, according to Van Der Merwe and Mollentze (2010:19) said Deflation is the opposite of inflation. Deflation is therefore a continuous decline in the general price level of the economy. 2. Reflation Reflation means normalising prices that have previously fallen.
History has shown that too much tightening of monetary policy to solve cost-push inflation will lead the economy to a recession. The central bank should tread carefully on how high to take interest rate. Increment in interest rate will lead to high cost of borrowing; thus, it will ultimately slow down the economic growth (Taing, 2014). This can also be linked to the theory that is covered in the unit plan. During the cost-push inflation, the government intervention by using contractionary monetary or fiscal policy will shift the aggregate demand curve to the right, thus, the price level decrease but the output level will decrease
The purpose of this article is to study the crashes of housing market, emerging market, poor banking sector and of course recession. Findings of the study shows that growth and expending domestic demand may increase import demand and it will cause growing economics. A cross sectional data was used. Hassan B. Ghassan et al (2013) used time-series data from 1986 to 2010. According to this study the absence of cointegration between international liquitidy net export and GDP are the cause of financial crises and its impact on Saudi Arabia’s economy specially on oil production.
Inflation is a rate at which general price level increases for goods and services produced in a nation. When inflation exists, the purchasing power of a nations currency declines over time. Inflation not only reduces the level of business investment, but also the efficiency with which productive factors are put to use. The benefits of lowering inflation are great, according to the author Dornbusch, but also dependents on the rate of
It also places certain people within the spectra of the economy. This is because politics has the ability to define who has the economic resources. We note that in the global context as well, there are consequences of unequal distribution of resources. An unequal resource distribution may lead to a political unrest and according to Acemoglu and Robinson (2006), “economic institutions are endogenous”. This means that some individuals will be given more benefits than others in economic resources which may end up in a total decline in economic growth.
On the other hand, international trade is modified in that inflations causes uncertainty that in turns dejects prolific activity, investing, saving and eventually diminishes the competitive factor of a country in international trade. Inflation is known to cause an economic depression which can lead to more adverse effects for example industries can run out of business, and employed people can be rendered jobless (Handley & Kyle,
Inflation commonly reflected by an increase in the general price level of good and service in a particular economy. As high inflation happen in the economy, the real purchasing power of consumer tend to diminish; while in the banking sectors, the real rate of return of bank asset tend to trim down compare to liabilities. The inflation level of the country is one of the important determinants of banks‟ profitability as it affects the real rate of return of bank’s assets. Zeitun (2012) assumed that inflation could be an important macroeconomic factor that affects the banks‟ profitability in which the impact of inflation is depending on how quickly is the increase in operating expense as compares to the inflation rate. Perry (1992) suggested that
TRODUCTION inflation is a sustained and considerable increase in price of goods and services in a country which result in decrease of purchasing power of money. For inflation to occur they must be an increase in all or most goods and services of price in general. Inflation is an economic measure, that tell us how well our economic. Objectives of price stability is achieved countries aim to have price levels as stable as possible in order make it possible for people to for the future. Increasing price reduce the buying power of people it will make people poorer and will create uncertainty about the future MEASURING INFLATION CONSUMER PRICE INDEX (CPI) For the most widely used in inflation measure.
The decline in the rate of economic growth raises the issue of unemployment. Obadan (1997) and Sagbamah (1997) Growth and unemployment go in reverse track. When the growth rate increases, it will fall unemployment rate.On the other hand, decline in employment (which is unemployment) will guide to decrease in production and thus in economic growth.Unemployment is also the increasing fact in Pakistan. The unemployment rate rise during the period of 1990s because of fiscal reduction and the low rates of economic growth or some other factors in Pakistan (Akhtar&Shahnaz, 2005).The views of different economists that economic growth is important to reduce the unemployment. Solow (1956) suggested that the economic growth result reduction in unemployment because when saving high it
It shows that, the basic need for tourist to travel and It also involve satisfaction of tourist. The relationship between tourist arrival and GDP has been shown in Brakke (2004) studies, ‘the increase of a percent in GDP per capita in America causes increase in tourism demand to an average destination by approximately 1.46 percent’. GDP represents the ability of a country to allocate the recourses for increase in the demand by tourists. For example, provide facilities that make tourist more demand on it. Next, according to Brakke (2004), there is a statement which is in Hong Kong ‘a ten percent decline in service earning from tourism results 5 percent decline in annual GDP growth.