The relationship between money supply and inflation

Introduction The current globalisation rate has led to many changes and effects on the value of most resources and especially the financial resources. The world’s population is increasing at a fast rate while on the other hand resources are being depleted without being replenished thus causing scarcity.Advertising We will write a custom essay sample on The relationship between money supply and inflation specifically for you for only $16.05 $11/page Learn More As a result, economic crisis have occurred which have as well affected the living standards of a better part of the world’s population (Hardwick, 2002, p.176). Among the common effects are the high inflation and the amount of money supplied. Economists have however established the rate of Inflation and the money supply of a nation are correlated with one leading to another. This paper is therefore an analysis of the relationship between the inflation rate and money supply. Inflation In flation is said to be the increase in the prices of commodities and services in a given economy. This makes the people buy less since their purchasing power goes down as a result of the lower value of the currency. Inflation rates of most countries keep fluctuating but their central banks try to keep the rates at a range of about two to three percent. The consumer price index is what is used to measure the inflation rates of an economy. It has been theoretically argued that inflation is caused by an increase in money supply in the economy (Hall and Taylor, 1997, p.637). Money Supply Money supply is an economic term which refers to the amount of money circulating in an economy. The central bank is bestowed with controlling the money supply of a country through regulation of the circulation (Williams, 2008, p.1). Money supply can be measured by looking at the value of currency, bills, credit, loans as well as other liquid instruments in an economy. The Relationship between money suppl y and inflation Economists have suggested that there is a high degree of correlation between the inflation rate and money supply in an economy. To begin with is the fact that when the money supply is high the demand for money goes down.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More This is because people are able to afford even the high priced commodities and services that they could not have initially afforded (Mishkin, 1995, p.89). It can thus be depicted that an upward supply of money in the economy results to inflation according to the graph shown below. (McMahon, 2009, p.1) A look at the graph at first glance does not show any instances of correlation however after the introduction of a time lag in which the two occur a situation of relationship is then established. This time lag is the difference in time between changes in the money supply and the changes in the inflation rates. Th us, the relationship occurs after a period of time as it can be depicted on the graph in the years 1990, 1996, 2000 and 2001 among others. This can be practically explained in a situation whereby the people of a given small town are given the opportunity to raise a higher income than they would have before in a month. They would thus shift from using gasoline to gas as their source of fuel which costs higher. This is because in real sense, the gas will cost proportionally lower than the price they were paying for gasoline before the increase in income. As a result, the market will bear high prices for commodities and services leading to inflation which has come about due to increased money supply (Williams, 2008, p.1). The relationship between inflation rates and money supply can be differently explained using different economic theories. The Monetary theory explains that money supply is the most significant factor that leads to incidences of inflation in an economy.Advertising We will write a custom essay sample on The relationship between money supply and inflation specifically for you for only $16.05 $11/page Learn More Quoting the words of a renowned monetarist by the name Milton Friedman, he said, â€Å"Inflation is always and everywhere a monetary phenomenon† (Williams, 2008, p.1). Thus according to empirical studies conducted by most historical monetarists, it can be asserted that inflation is a monetary phenomenon. This is in accordance to the equation; MV= PQ Where; M is the nominal value of money (money supply) V is the money velocity P is the price level Q is the real value index (Transactions) From the above equation, monetarists argue that the money velocity is not affected by changes in the money supply in the long-run (Mankiw, 2002, p.153). Therefore the output is highly dependent on the productivity of the economy.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Working with these assumptions it can be said that changes in price are dependent on the changes in the quantity of money in the economy thus the money supply. The chart below derived from the above equation shows the differences in inflation reflected by CPI and the money supply reflected as M2. Fig. A chart showing the relationship between inflation and money supply (Burda and Wyplosz, 1997, p. 267) According to the Keynesian theory, there still exists a relationship between money supply and inflation. However, they argue that money supply is not the only big factor that causes inflation as there are also other contributing factors. The Keynesians emphasize that aggregate demand is the main reason behind inflation and thus regulating the aggregate demands in periods of recessions and economic expansions helps stabilize the inflation rates as well. Nevertheless, the relationship comes about as aggregate demand is effectively controlled using economic instruments such as monetary p olicy and fiscal policy (Burda and Wyplosz, 1997, p. 275) Conclusion From the above discussion, it can be concluded that there is indeed a great correlation between money supply and inflation rates of an economy. It is evidenced that changing the money supply through the central banks leads to a control of the inflationary situations in the same economy. For instance, a country with high inflation rates and willing to lower them, they will do this through the operations of the central bank whereby the lending rates and the interest rates will be increased to reduce the amount f money leaving the bank (Baumol and Blinder, 2006, p.109). As a matter of fact, people will rush to deposit the cash they have so that it can earn as much interest as possible. This will in turn reduce the amount of money circulating in the region hence reducing the inflation rates as well. In a situation of deflation the vice versa will be applied where the central bank will reduce the lending rates and inter est rates so as to enable flow of money into the economy (Baumol and Blinder, 2006, p.109). The control between money supply and inflation rates is thus operated using the federal banking system of the central bank of the region. Reference List Baumol, W. and Blinder, A. (2006). Macroeconomics: Principles and Policy, Tenth edition. Thomson South-Western. Burda, M. and Wyplosz, C. (1997). Macroeconomics: a European text. Oxford [Oxfordshire]: Oxford University Press. Hall, R. and Taylor, J. (1993). Macroeconomics. New York: W.W. Norton. Hardwick, P. (2002). Introduction to modern economics, prentice hall publishers, New York. Mankiw, N. (2002). Macroeconomics (5th Ed.). Worth. McMahon, T. (2009). Money Supply and Inflation. Available from https://inflationdata.com/inflation/Inflation/Money_Supply_and_Inflation.asp . Mishkin, F. (1995). The Economics of Money, Banking, and Financial Markets, New York, Harper Collins. Williams, J. (2008). Money Supply Special Report. Available from   http://www.shadowstats.com/article/money-supply . This essay on The relationship between money supply and inflation was written and submitted by user Jaylen Ochoa to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Commands and Requests in Spanish Without the Imperative Mood

Commands and Requests in Spanish Without the Imperative Mood Although the imperative mood is frequently used to tell or ask people to do something, other verb forms also are used. This lesson covers some of the most common non-imperative ways of giving commands. Infinitives as Impersonal Commands The infinitive (the unconjugated verb form that ends in -ar, -er or -ir) is frequently used, especially in print and online rather than verbally, to give commands to no one person in particular. It is seen most commonly on signs and in written instructions. Examples: No fumar. (No smoking.) Hacer clic aquà ­. (Click here.) No tocar. (Do not touch.) Sazonar los frijoles y servirlos en un plato. (Season the beans and serve them on a plate.) Colgar el telà ©fono y esperar. (Hang up the telephone and wait.) Use of Present and Future Tenses to Give Commands As in English, the present and future indicative tenses can be used to issue emphatic commands. Using the present and future tenses in this way normally wouldnt be done when youre trying to be diplomatic; more likely, they would be used when simple persuasion hasnt been successful or if youre trying to be particularly matter-of-fact. Examples: Comers el brà ³coli. (You WILL eat the broccoli.) Me llamas maà ±ana. (You call me tomorrow.) Indirect Commands By using the subjunctive mood in a clause beginning with que, it is possible to indirectly give a command to someone other than the person being spoken to. As the following examples indicate, a variety of English translations can be used, depending on the context. Examples: Que Dios te bendiga. (God bless you.) Que vaya à ©l a la oficina. (Have him go to the office.) Que me traiga ella sus archivos. (Tell her to bring me her files.) Que en paz descanse. (May he rest in peace.) First-Person Plural Commands There are two ways to give a command to a group that includes yourself: use followed by the infinitive, or use the first-personal plural subjunctive form of the verb. These are typically translated in English by using lets. In the negative form (lets not), the subjunctive form (not no vamos a) is typically used. To say lets go, use vamos or vmonos; to say lets not go, use no vayamos or no nos vayamos. Examples: Vamos a comer. (Lets eat.) Comamos. (Lets eat.) No comamos. (Lets not eat.) Vamos a hacerlo. (Lets do it.) Hagmoslo. (Lets do it.) No lo hagamos. (Lets not do it.)

Private Schools for ethnic minorities in Alberta, Canada Essay

Private Schools for ethnic minorities in Alberta, Canada - Essay Example The state can create a community that would be a single ‘cultural ghoulash’; or it can also create separate units/ghettoes for each ethnic group that would later be coerced to form a political unity. Thus, it would be â€Å"melting down the citizenry into a nation of â€Å"Americans† or â€Å"Canadians,† people who will largely share nationally defining characteristics and attributes, and, on the other hand, balkanizing them into officially structured units within the state, each with their own defining characteristics, attributes, and values†( Dickinson & Dolmage, 364). However one has to keep in mind that modern society does not function on such simple guidelines. It is not possible to bulldoze all the members and mould them into one cultural frame; and this is very apparent in the numerous leaks that have appeared in the so called ‘American cultural melting pot’; nor does ‘balkanization’ work, as we see in the failure of the former state of Yugoslavia.The ethnic groups in Canada fall broadly under a category of the population as those citizens who are not English or French in their origin and also not a member of the native Canadians. Young in his article speaks of 4 ways in which such a diverse and ethnic cultural racial group, can coexist peacefully within a social order. First, these groups can ‘assimilate’ and become a part of the host country’s culture, in this, they will have to forsake their own cultural origins.

War of 1812 Essay Example | Topics and Well Written Essays - 750 words

War of 1812 - Essay Example Britain was engaged in war with France and wanted to curtail the trade capability of its enemies thus cutting trading channels (Wait 42). At the same time, Britain had implemented a forced recruitment of US seamen in to Royal Navy and started assisting Native American Indians who were engaged in forced resistance of the expansion of US frontier to the North West. The other immediate cause of the war was the desire by the United States to annex Canada territory and expand its frontier Northwest through conquering the Indians (Norton, et al 627). Over several decades, Americans developed the feeling that the Mexicans had very little respect for the young United States. Besides, Mexicans prompted arrogant attacks to the United States and this created a lot of hostility to both nations. Even though the war got official, declaration in June 1812, preparations for engagement in such kind of an attack was already in place with the government congress inviting more volunteers to join the mil itary and the number was rapidly increasing (Black 118). American Indians had cordial relations with the British as a way of building up power to fight against a common enemy. This led to a military support since Britain offered weapons to the red Indians in order to suppress United States military from invading the northwest region that had fertile soil and natural resources (Wait 42). The possible resistance of invasion of the territory from both sides was as an imminent factor to stage the war later named the Mexican war. There was anxiety because the United States had a composition of two major armies. The fist one termed as the United States Amy seconded by the one authorized by the congress. Therefore, the congress army was set up with an agenda to wage wars in order to restore dignity and honor from the nations as one of the strongest forces in the world and it was through this, that the Mexican war came into place as a solid test to determine the strength of such an existenc e (Hanson 31). The United States achievements from the Mexican war Despite objections by the abolitionists, the United States gained recommendable boost on military confidence and mighty since volunteers who joined the forces to help fight enemies. Their military populations remained the same even after the war had technically ended and the US was considered a military power. In addition, the Indians having being supported by the British with the sophisticated weapons, finally agreed to sign treaties in order to allow for United States frontier expansion in Northwest. The United States asserted its trade independence under the international law and need for neutral rights of the countries engaged in the war. Later, Mexican government accepted to a fine charge for having assaulted the United States and agreed to pay a debt amounting to more than three million United States dollars (Wait 42). Conclusion I believe that the United States attained high military confidence by defeating a force that was large and superior in terms of military equipment to the United States and President Jackson demonstrated to the entire world that the US was a powerful military force. Although the signing of treaty after British defeat at New Orleans technically ended the war, the United States attained nationalism and was capable of signing treaties in Northwest thus opening the Native Indian lands for American expansion. Accordingly, the US asserted its trade

The positive aspects of media Essay Example for Free

The positive aspects of media Essay Media is part of our everyday life. We take the knowledge we get through newspapers, television, the Internet and radio for granted and often we tend to focus on the negative influence it has on the society. In this essay I am going to discuss aspects of media which can also have a negative impact but which usually benefit the world we live in. The media is easily accessible one can buy a newspaper in any city of the world or find a television or radio signal. People know a lot more than they did a century ago. For example, media plays an important role in educating people about health and diet. There are articles in newspapers which give general tips about how to be more healthy but also stories which tell people to do regular check-ups for cancer. The fact that media is accessible and educates people might be part of the reason why modern people live longer. The fact that media is widespread contributes to the fact that it cannot be controlled by a single authority. The media brings many different views to the public and anyone who has access to the Internet can write his own opinion about the matter at hand. A few years ago in Estonia there was a conflict between two different nationalities the Estonians and the Russians. The conflict was about different historical opinions and since practice showed that the two parties cannot come to an agreement by talking things through, the Internet was a good place to find different arguments on both sides and calmly come to an agreement. Media acted as a bridge or mediator between the two sides of conflict. We can rely on the knowledge we get through the media when we have seen or heard the person who has immediate contact with the matter at hand. Our knowledge has to be reliable because otherwise we would be unable to have a justified opinion about different issues. Millions of people watched the elections of Americas president. The television helped them to develop an opinion about the worlds most powerful man and rely on the fact that he is not made up or and everything they know about him is cohering with what they have read from the newspapers. Besides the negative aspects of the media it also has a lot of positive factors. For example it is easily accessible, it mirrors many different viewpoints of different matters and it also brings us the immediate experience of the events instead of hearing about them from another source. The media has many aspects which deserve praise and which make our society to be more democratic and educated.

School Psychologist :: essays research papers

The purpose of this informative interview was to develop a better understating of certain aspects of the School Psychologist that are of interest to me. My interviewee for the Psy 600 interview assignment was Elsie, a school psychologist intern for the Board of Education. I have conducted this interview over the phone. In preparation for the interview, I picked the questions from professor’s guidelines, that I felt important for helping to persuade myself to go into school psychologist field.   Ã‚  Ã‚  Ã‚  Ã‚  Before becoming a school psychologist, Elsie has been involved in general education for 7 years and in special education for 6 years. While working with special education population, she has developed a strong interest in learning to identify the main cause of behavioral and emotional problems in children. Therefore, she learned that the School Psychologist professional training would enable her to explore her career in area of special education.   Ã‚  Ã‚  Ã‚  Ã‚  Elsie’s favorite part of the job is the evaluation process that involves the: assessments and other psychological testing. The most important part of the assessment is identifying the problems associated with learning and behavior. Elsie said that the assessments are something like a â€Å"detective work,† but of course nature of work, is different. Elsie’s least favorable part of the job is the enormous amount of administrative paperwork to be completed and submitted to the principal and other administrative staff.   Ã‚  Ã‚  Ã‚  Ã‚  Elise also mentioned the importance of the School Based Support Team within the school system. The SBST consists of: education evaluator, social worker, and a school psychologist. However, when the education evaluators were discontinued from the school system, the SBST became a IEP team. The IEP team consists of. Social Worker and School Psychologist. The advantage of being part of the team is to make the evaluation process easier. When asked about the preferable counseling interventions, Elsie said that there was no one size fits all interventions and it must be based on individual needs of every student. One of the crucial elements of evaluation process, from Elise’s experience, is a class observation.

Advanced Manufacturing Processes and Materials (Turbocharger)

Turbocharger is nothing but a gas compressor, which is kept in use to forced-induction of the internal combustion engine. It is a derived form of supercharger. The fundamental function of the turbocharger is to enhance the density of the air which is entering in the engine. Density is increased to produce more power.Compressor, turbine and shaft are the core and essential parts of a turbocharger. Compressor of the turbocharger got power by a turbine and this is driven by exhaust gases of the engine. Direct mechanical drive is not used like many other superchargers.In early days or in the days of the invention of turbochargers, it is referred as turbosuperchargers because turbochargers were derived from the superchargers by combining a turbine in the accessories of superchargers. Compressor was there in the superchargers, but turbine was not present in superchargers.In turbochargers, a fan pump of small radius comes into the driving condition with the help of the gases which get exhau sted by the engine. The main assembly parts of the turbochargers means turbine, compressor and shaft are attached in such a way that turbine and compressor shares a shaft and get attached with it.The turbine is used to alter the exhaust heat and pressure into the rotational force and this rotational force drives the compressor. Compressor increases the pressure of the air and this pressurized air enters into the cylinders on each intake stroke. This in turn increases the volumetric efficiency of the engine and this is done by solving one of its cardinal limitations.Only downward strokes of a piston are used in naturally aspirated automobile engine, but the pressure of the atmosphere can not be increased more than 1 atm. This thing creates a pressure difference limit in the naturally aspirated automobile engines, which limits the amount of airflow entering the combustion chamber.But turbocharger eliminates this limit because it is designed in such manner that it increases the pressur e at a particular point from where air enters into the cylinder. This in turn maintains pressure into the combustion chamber, which increases the revolution speed. This increasing speed produces high power and torque at the output of the engine.But there is a limitation on the pressure in the turbocharger. Pressure should not cross its critical limit, otherwise explosion and physical damage may occur in the engine. To avoid such type of conditions an arrangement has been made there in the turbocharger. In this type situation intake pressure is being controlled by venting excess gas and this facility is being provided by wastegate functionality.