Moderate Inflation Is Beneficial to Society 通货膨胀的(英语论文).docVIP

Moderate Inflation Is Beneficial to Society In economics, inflation is the phenomenon of prices of goods and services generally rising in an economy during a period of time (Barro 895). There are complex factors contributing to the phenomenon and yet no economist has a definite conclusion. Inflation is more commonly induced by increases in aggregate demand (Gordon 728). Through analyzing the causes, it is believed that moderate inflation is beneficial to society in many aspects. Demand inflation is generally induced by private and government spending and it’s good for economic recovery. The financial crisis of 2007 to 2008 overwhelmed the world and many countries faced recession. Governments delivered a series of policies to restore their economies. For instance, China initiated the positive fiscal policy and launched an economic stimulus package of 4000 billion (/ens/finance_investment/2009/03/07/ .shtml). The Congress in the United States of America also approved the policy of Quantitative Easing (/Html/JR WZ/75442.html). What those governments did definitely caused inflation but at that time inflation was needed because they could stimulate market demand, which was good for economic recovery. Demand inflation encourages market development and expansion is inevitable, which can definitely reduce the unemployment rate. In 1958, Phillips described in a paper his observation an inverse relation between inflation and unemployment, that is higher unemployment in an economy is correlated with a lower rate of inflation (Fisher 496-502). According to the statistics from the EU, the unemployment rate of the Euro Zone in march of 2009 is 8.9% and the inflation rate was 0.6% (/roll/ /.shtml). In China and other developing countries, the unemployment rate is relatively lower and the inflation rate is higher. For China, unemployment rate is approximately 4% and the inflation rate is nearly 5% (Cara Associated Press, retrieved 30 Dec, 2010.). These examples