Inflation, in a broad sense is the rate at which the prices of goods and services increase in a market. It is a good indicator to assess the health of an economy. It is key for students to understand the factors that give rise to inflation together with the various terms and effects it brings about to an economy. The illustration of inflation in graphical terms is also important in order for students to do well.
Economics Tuition: Explain why government tries to maintain price stability to maintain or enhance its level of investments
First, a high level of inflation introduces business uncertainty and hence reduces investors’ incentive to invest. Specifically, hyperinflation disrupts the derivation of cost of production, making it difficult to set price which discourages trading activities and...read more
Given that housing is an asset to home-owners, the rise of the price of assets will cause the individuals to raise the price of their factor services as they peg their factor cost to the price of the housing prices. The price of assets will rise due to the inflow of...read more
Cost-push inflation occurs when there is a rise in cost of production which will lead a fall in the aggregate supply that will lead to an excess demand condition, contributing to increase in price level. When the cycle becomes cyclical, it will develop as wage-price...read more
When there is a rise in oil prices, the cost of production is increased which will lower aggregate supply, resulting in an excess demand condition, thus raising general price level. Hence, cost-push inflation arises. An oil price hike leads to inflationary pressures....read more
Economics Tuition: Inflation is harmful to an economy and hence it should be the priority of the Singapore government to reduce inflation. Discuss.
Singapore experienced a quarterly growth rate of -0.7% from April to June 2012. However during the same period, inflation rate remained high at about 5%. "Inflation is harmful to an economy and hence it should be the priority of the Singapore government to reduce...read more
Economics Tuition: Explain why inflation can remain high despite a slowdown in economic growth in Singapore
Singapore experienced a quarterly growth rate of -0.7% from April to June 2012. However during the same period, inflation rate remained high at about 5%. Explain why inflation can remain high despite a slowdown in economic growth in Singapore.  Introduction...read more
Discuss why governments are concerned to keep up the rate of inflation at a low level. Introduction Inflation is a situation where there is a sustained and inordinate increase in the general price level when there is excess demand without or with an inadequate...read more