Compose a 1250 words assignment on inflation or recession in the usa. Needs to be plagiarism free! Therefore, on the consumer side, inflation is not welcomed at all. In times of recession, the inflationary pressure is bound to go down, however, the world economy is seeing turbulent times and the inflationary pressure is not decreasing with the same extent as it should. This has raised many questions regarding the factors due to which this phenomenon is occurring. The basic idea of this research paper is the discussion regarding the recession that has engulfed the world economy and how inflation is working to provide support to the economy.
One of the major ways through which inflation is through controlling the money supply that exists in that particular economy. The control of the money supply in an economy resides with the central bank of that state. However, there are other factors that affect the inflation which is also beyond the control of economies. Generally, in a stable economy, a slow increase is considered desirable and acceptable. A slow and steady growth rate in inflation might indicate the movement of the economy towards prosperity and boom. A rapid increase or decrease in inflation might be an indicator of an underlying problem of an economy. (William, 1980)
The tools with which the state banks or controlling authorities regulate the inflation are interest rates, money market operations or through setting appropriate reserve requirements. All these three tools are used to manipulate the rate of inflation that is existent in an economy.