What is the optimal rate of inflation Essay Example | Topics and Well Written Essays - 1000 words

What is the optimal rate of inflation - Essay Example The causes of inflation are many and complex but economists do point towards the interaction between the output given by an economy and the supply of money in a system as well as the interest rates established by the government as guides for what inflation would be present in a country. Monetarist economists believe that the supply of money is most important in setting the rate of inflation while the Keynesian economists suggest that interest rates and economic output set the rate of inflation (Wikipedia, 2007). The problem with defining what the optimal rate of inflation should be comes from the difference in theory and practice. Certain theories point towards negative inflation being the best but it has been shown that countries with negative inflation suffered the consequences because other factors influenced their economic situation. Others suggest that a positive rate could be the optimal answer but some countries have suffered from uncontrolled inflation and overheating economies when inflation became difficult to control. Politicians on the other hand prefer to see zero inflation since it is easy to project an idea of economic stability if they can point towards zero inflation as well as a zero unemployment rate (Palley, 1998). Another difference between economists and the economic policies of several state operated banks around Europe is their optimal rate of inflation. It seems that there is no real consensus on the idea and while some economists suggest that the optimal rate of inflation in an economy is slightly negative (Friedman, M. 1969), others show with examples from recent history that a slight rate of inflation could actually be good for the economy (Sinclair, 2003). The dominant economic paradigm, subscribed to by both the government and the stock markets, is the theory of the Non-Accelerating Inflation Rate of Unemployment (NAIRU). This is also called the alias the natural rate of unemployment (Palley, 1998). The theory maintains that if the

Assignment 1 Example | Topics and Well Written Essays - 500 words - 4

1 - Assignment Example The company has been in existence since 1980. The company is well set up and its employees have an average of 8 years work experience. All of their 30 personnel have at least a college qualification. This company has their own equipments which are maintained in their site. This vendor does not respond with haste to projects but offer quality service and is averagely flexible. Upon contract agreement, they start work after 6 to 8 weeks. It employs its own equipment and can work into the night to complete the project but charge for every extra hour. In case an extra item arises a charge of 200 dollars per hour is levied with equipment if required. The company has operated from 1995. The personnel of this vendor on average have a working experience of 10 years. They have fewer employees than vendor 1, as they have 18 full time employees. All the 18 employees are as qualified as the ones for vendor 1. Just like vendor 1 they are not very quick in responding to projects. Unlike vendor 1, it is highly flexible but offer moderate quality service. It also has some of its equipment maintained in site. Upon contract agreement, they start work after 4 weeks which quicker compared to vendor 1. Vendor 2 offers a break down in its pricing and identifies what can be done in house. It can also customize and write training programs using the company’ material. In case an extra item arises a charge of 180 dollars per hour is levied with equipment if required which is less than vendor 1’s offer. The company has existed since 2000. It’s a new firm but their personnel have an average of 5 years experience. It has 10 employees who are highly qualified compared to vendor 1 and vendor 2. They respond very fast to project and are moderately flexible. The company offers acceptable quality but not outstanding. They respond a week after an agreement is reached. They can work into the night to complete the project. In case an