The Inflation Rate: Positive And Negative Effects

Intro

A. Inflation rate refers to a complex series of explanation when it comes to the effects of it in the economy. But first let us separate inflation with rate and determine the difference between them before we come up to the specific meaning of it as a whole. Inflation therefore is a continuous rise of prices that is caused by an increase in the money supply and demand for goods, while rate in the other hand is the decrease in the purchasing power of money. Hence, inflation rate is the percentage at which currency is devalued during a period. What are the causes of it and how does it affects us? From observation we could clearly see that inflation affects not only us filipinos it has even reached globally, it is evident with the current status of the stock exchange particularly with that directly affects the people. Economists studies has shown how erratic condition of how our money flows what with the continuous changes of a prices of common commodities like gasoline, rice, electricity, and other basic necessities that are consumed daily by the people.

B. Contractionary arrangement is diminishing the cash supply in the economy to reduce the measure of cash circling in the economy. It's a notable technique for controlling swelling to help the costs of products decline. This aides in light of the fact that less cash will go around, individuals who have additional cash will keep it to spare it as opposed to spending it on their needs or extra costs. The decrease of spending can help the economy in swelling since it helps its development, thusly, the rate of expansion.

Deflation is caused by various factors however is to a great extent credited to two: a decrease in total interest. A decrease in total interest normally results in consequent lower costs. Additionally, emptying causes the ostensible expenses of capital, work, products, and administrations to be lower than if the cash supply did not contract. While value collapse is frequently a reaction of financial flattening, this isn't generally the situation. Deflation has been a well known marvel among financial specialists for quite a long time, flattening happens when the economy is settled. This is the partner of swelling.

Deflation, inflation, shortage of products, now recession. What is recession? It is a lull or a monstrous compression in monetary exercises. A noteworthy fall in spending for the most part prompts a recession. Notwithstanding that, it is a stoppage in financial exercises may keep going for a few quarters in this way totally hampering the development of an economy. In such a circumstance, financial markers, for example, GDP, corporate benefits, vocations, and so on. , fall. This disintegrates the economy by diminishing the loan fees, increment in spending by the legislature and decline in tax collection.

C. Inflation rate is the general rise of the goods and services over a given period of time. It has both positive and negative effects but the positive effects will only appear after a long period of time, while the negative effects will sure be felt by the people because of the sudden raise of goods and services. Moreover, inflation rate usually portrays the negative effects such as; grandiose price hike of the goods, sudden drop of the economy and lastly the raise of poverty. People focus on the short term outcome that’s why they fail to see the long term effect of the inflation.

Body

Shortage of goods- deficiencies, drought, failure, famine, lack, insufficiency, poverty, scarcity and undersupply, here are the words that usually come into everyone’s mind when shortage is heard. But what is the real meaning of shortage of goods? —A sudden shortage of goods is called a shortage and happens for a variety of reasons in economics. If there is a problem in the supply chain, that can cause the normal amount of goods to fall and prices will rise to reflect the new reality of how scarce those goods are. Another cause of a shortage of goods can be if the government acts to control prices through price ceilings which can result in increased demand leading to shortages of goods. Now that we have a deeper understanding about shortage of goods let us now discuss how crisis escalates as shortage push price to go higher. Our country, The Philippines, is an agricultural, with lush greenery, cultivated fields, and rich aquatic ecosystems but why are we suffering from insufficient supply of rice and other food resources? According to Secretary Emmanuel Piñol, the proposed importation will address the “very limited” supply of rice and fish in the southern provinces of the country. The said shortage is reportedly being experienced in several provinces in Mindanao, where rice already costs about a hundred pesos per kilogram. This have a huge impact to our fellow countrymen especially those families who do not have a stable job. We are facing this conundrum that dug deep into our economy, it is a giant pit-hole who held people captive. Everyday gnawing stomach uprises, people desperately making income to provide food to their family and more of us die because of hunger that is caused by this shortage.

Stuff Costs More- Inflation can affect everyone, from the lower class to the upper class. Almost all would be aware that one of its effects is increasing or rising of prices in the market. One of its circumstances is a growing economy. When more people get jobs, it results to a higher demand in the market. It is because they get more allowance to buy the stuff they want compared to the times when the number of people employed were lower. The sellers will be forced to raise their prices because otherwise, they will sell out. Also because of the comparatively higher population in the Philippines, the demand would be higher than some countries. Though getting employed and having a job is essential in life, it has a downside regarding the costs of prices.

Borrowing Money Is More Expensive-Borrowing money is more expensive due to the high interest. The interest grows higher because the demand in economy rises, this demand causes the goods and service to raise thus the interest that the person borrowed will be more expensive. This makes the interest in your loan be higher, this will cost the loaner a lot than what they actually loan. In addition to that, people loans money because of different reasons but regardless of the reason there are a lot of people that is exploited an suffers to pay the loan.

Conclusion

• Inflation affects the budget of the consumer which it is not a good effect for the people. Not all people has the ability to buy everything because of their income so they need to save more money in order to have an exact or extra amount of money to spend on their needs and wants because of this many people is against the inflation rate and rallies because they don’t have the capability to adopt to this kind of raise.
• Inflation has two different effects, positive and negative effect. On the present day, the inflation is not good in our economy because it also says that shortage of goods is happening that’s why there is an inflation. Rises of prices on everything really affects everyone and made it difficult for them in budgeting and saving money. On the other hand, the positive effects of inflation are if prices go high, it is due to high demand and it is a good sign for businesses. Inflation can be a side effect of fast economic growth in the future. The positive effect of inflation are restricted to a small part of the economy.
• Inflation rate is the general ascent of the products and ventures over a given timeframe. It has both constructive and adverse impacts however the beneficial outcomes will just show up after an extensive stretch of time, while the contrary impacts will beyond any doubt be felt by the general population due to the sudden raise of products and ventures. The inflation that is going on in the Philippines is certainly not a decent one particularly it has a high rate of increase from the previous costs before. This makes the general population look in the negative impacts as opposed to the advantages the expansion rate will get what's to come.