How to control inflation) contest by @vickydear
Good evening my fellow lovely steemians, I am very happy to meet with you people again, hopefully all of you are doing well, it's my pleasure to participate in this interesting contest, and most importantly I am grateful to @steementrepreneurs and @mainuna who took time to initiate this contest,
WHAT IS INFLATION
The term inflation can be used to explain the increased or rise in the price of good and services due to decline or depreciation of currency in a country.
When there is a rise inflation, this will show a fall in consumer obtaining power and this will result in an increment or rise in the cost of living, when the price rise your money will buy less.
HOW TO REDUCED INFLATION
It is true that inflation affect almost every facets or line of economy, ranging from the individual spending capability to interest on the country debt.in order to reduced inflation these are my views:
Monetary regulations or policies
This primarily imply changing interest rate to manage and control inflation,it is also involved the used of tools device such as money supply to reduced the amount of money that is in circulation.
When the amount of money in circulation has been reduced, the demand will also reduced and the rate of inflation will slow.
Financial policy
This is one of the best policy that can be used to reduce the demand in the economy, there by increases the taxes and then reduces the amount that government planned to spent.
HOW PRODUCT INFLATION OCCURS
The product inflation is also called price inflation or simply inflation, and these can occurs when there is a sustainable rise or increase in the price of goods and services generally in economy for a long period of time. There are many factors that contribute to the product inflation and these are:
Demand force inflation : this type of inflation occurs when the demand for goods and services is greater than the supply, and it will leads to competition among the buyers and higher pressure in the price.
Cost press inflation: this is the type of inflation that occurs when the the cost of production is increase, example rises in wages and cost in raw materials and taxes, then the producers impose these higher cost on consumer in terms of higher price.
External agent: this is occurs due to the event like natural disasters, and some changes in the global commodity, it may influence inflation by affecting supply and production cost.
Government policy: this is occurs when government imposed duties levied on the imported goods, removing of subsidies and set some regulations that may influence price of goods directly or indirectly.
REASONS WHY INFLATION IS HIGHER IN THE VILLAGE THAN CITY
There are many reasons inflation is higher in the City than in the city, these are:
There is limited in the supply of goods and services due to the fewer shops and these can make the price of goods higher.
Cost of transportation: transportation of goods to the interior villages is more expensive because of the longer distances and poor roads.
Structure of the market
Levels of income
Import dependency
THE ROLE OF COUNTRY GORVERNMENT TO REDUCE INFLATION
The country gorvernment have a greater role to reduce inflation, it is their responsibility to do that and they have few ways to do that:
- They can used monetary policies
- They can put a protective measure on the price of goods and services.
- They may used wages and the price of goods to fight and reduce inflation.
CONCLUSION
The rate in which the price of goods and services increases affect all series of economy and these have a greater influence on people purchasing capability, and affecting the growth of economy leading to the rising and lowering of the interest cost on the country debt.proper managing and understanding inflation is the key to reducing inflation.
Please @emmybless, @iddy, @edivic join us in this interesting contest