Causes And Effects Of Inflation

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Inflation, this word certainly carries fear and resentment among many. This condition is a self-defining term meaning increase. Inflation may show a direct correlation with the negative impacts on the standards of living decreasing. As inflation proceeds to increase, so do the cost of certain necessities that may again impact the standards of living. Presently the core inflation rate removes the effect of certain seasonal food and energy increase. Additionally, the target inflation rate is at 2.2% and has fluctuated slightly since the beginning of the 2016 calendar year ("Databases, Tables & Calculators by Subject", 2016).
Additional causes of inflation may be linked to three specific causes of demand-pull, cost-push, and monetary expansion.
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If the inflation rate were to grow, individuals may have harder time to find employment due to the retailers, manufactures and those that offer services. During a recent FOMC meeting Tim Duy reported that, “With respect to the outlook for economic activity and the labor market, participants shared the assessment that, with gradual adjustments in the stance of monetary policy, real GDP would continue to increase at a moderate rate over the medium term and labor market indicators would continue to strengthen. Participants observed that strong job gains in recent months had reduced concerns about a possible slowing of progress in the labor market” (Duy, 2016). Again, the economy’s ability may only recuperate if employment is attainable by the consumer’s that supply the economy with their wages earned by being gainfully employed. In regards to inflation, currently inflation is rather steady at 2% gain. However, the Federal Reserve shows concern with the rather low rate of inflation. In an article published by The Washington Post Harlan stated, “Inflation has been held down both by plunging energy prices and stagnant wages, and some economists expect that it will pick up as the labor market tightens and employers offer raises to compete. But the Fed’s minutes showed that, for some in the Fed’s 10-member committee, “the risks attending their inflation forecasts remained considerable.” Those risks could take the shape of oil price shocks or a sustained rise in the value of the dollar. The Fed has a mandate to guide the economy both toward maximum employment and stable prices” (Harlan,

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