Question

Go to the internet and find a news article published within the last month 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.

Answer 1

Answer: The explanation is provided below

Explanation:

Below article is the summary of the acceleration of inflation in the emerging markets that was published in 2018.

According to the article, inflation in an economy is caused by an adverse supply shock or as a result of the expansionary fiscal policy or the expansionary monetary policy.

In an adverse supply shock, total quantity of basic goods will reduce drastically causing the aggregate demand to rise exponentially and therefore, push prices higher and then gradually lead to inflation.

Also, the continous and eventual implementation of the expansionary fiscal or monetary policy through continous tax cuts or by increasing government spending or reducting interest rates, lead into significant increase in the aggregate demand and as a result, prices rise eventually resulting in hyperinflation in the economy. This will also lead to increase in the real GDP of the economy.

Different tools in the monetary policy framework can be used to control inflation such as government securities,

the cash reserve ratio, interest rates. To reduce recession, government utilize automatic stabilizer in order to boost the economy.