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Your assignment is to prepare and submit a paper on the methods open to a government to control the rate of inflation within an economy.
Your assignment is to prepare and submit a paper on the methods open to a government to control the rate of inflation within an economy. According to the research findings, it can, therefore, be said that individual prices rise and fall all the time in a market economy, reflecting consumer choices and preferences, and changing costs. Inflation is considered as one of the vital economic variables because of its impacts on the economy as a whole. From impacting the savings to investment, there are lots of uses of inflation which are more negative in their impact on the economy of any country rather than having positive impacts on the economy. UK economy, in recent years, has consistently shown increasing trends as the inflation has remained as high as 4.8% in March 2007. This general increase in the price levels within the economy has resulted in the widespread economic measures both by the Bank of England and the UK government including the raising of the interest rates by Bank of England and other measures to curb the inflation in the economy. Inflation is an economic concept which generally means a sustained increase in the general price levels of all goods and services. In layman language, we can easily summarize inflation as the phenomenon which makes your money value less with each passing day as it erodes its purchasing power. Generally, inflation is measured by a consumer price index which usually measures the price changes in some predefined commodities of greater use by the consumers. These can include essential commodities like wheat, sugar, gasoline etc which are basically considered as very critical and are used by many. Based on the basket of these goods or even services, changes in price levels of this basket of goods and services are measured over the period of time usually taking or setting one particular year as a base year and all subsequent calculations are then based on this base year.
