Inflation is a sustained increase in the general price level over time within an economy. It is regarded as an economic problem as it leads to a fall in the value of money or real purchasing power. Inflation is caused by demand and supply pressures, notably demand inflation, cost inflation, imported inflation and inflationary expectations. Coupled with the many negative effects that Inflation burdens on the Australian economy, the government sets about using a variety …
showed first 75 words of 1124 total

showed last 75 words of 1124 total
…conduct rules in markets. These policies set about increasing AS, so that inflationary pressures may not arise as a result of a deficiency in Supply. These policies lead to ↑ productivity, ↑ technologies, ↑ education, , increased proficiency and increase in competition, which will intern combats inflation within an economy. Therefore it can be seen that through the use of various macroeconomic policies, the government may control the causes and effects of inflation within an economy.