What would you advise instead of “IMPORTATION”?..?
During inflationary situation, it is advised to increase "importation". But this would cause an unfavorable BALANCE OF PAYMENTS which is also a negative economic determinant like inflation.What would you advise?
Answers:
during inflation, there are more buyers of scare supplies which pushes up the prices. there is an increase in the amount of money in circulation, consequently a decreased amount of commodities. in which case, it is called a demand-pull inflation.
there is inflation too, when costs to manufacture increase without corresponding increase in production. wherefore it raises the prices of the product and s stagant demand for it. this is a cost-push inflation. i would advise to control the money supply in circulation. this may happen when the monetary board ask all commercial banks to increase their reserve requirement. this way, lesser amount of money will circulate. interest rate will rise. nobody's likely to borrow money. everybody takes hold of cash. demand gets lesser until prices start to go down, towards a situation where buyers becomes willing to pay the price and sellers able to keep their profit.
close door policy. no goods flowing out and no goods coming in. no more inflation and will have a stable economy.
simply increase productivity
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Answers:
during inflation, there are more buyers of scare supplies which pushes up the prices. there is an increase in the amount of money in circulation, consequently a decreased amount of commodities. in which case, it is called a demand-pull inflation.
there is inflation too, when costs to manufacture increase without corresponding increase in production. wherefore it raises the prices of the product and s stagant demand for it. this is a cost-push inflation. i would advise to control the money supply in circulation. this may happen when the monetary board ask all commercial banks to increase their reserve requirement. this way, lesser amount of money will circulate. interest rate will rise. nobody's likely to borrow money. everybody takes hold of cash. demand gets lesser until prices start to go down, towards a situation where buyers becomes willing to pay the price and sellers able to keep their profit.
close door policy. no goods flowing out and no goods coming in. no more inflation and will have a stable economy.
simply increase productivity
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