Write article on rising price with introduction and advantages and disadvantage.
Answers
Answer:
Explanation:
1.It will prevent underemployment and depression. It gives continuous stimulation ti +he business community to invest and expand which will assure continuous economic progress with a high level of employment and prosperity.
2. It may safeguard against the risk of deflation, when a rising price level is favoured by the monetary authority by adopting cheap money policy as an anti-deflationary measure and a policy of economic development via inflation.
3. Rising prices distribute income in favour of profiteers’ class whose marginal propensity to save is very high and thereby the rate of saving cribe enhanced for capital formation and other productive activity. This is especially advocated for an underdeveloped country with a capital deficiency.
4. To most economists, however, the most important motive of the policy of rising prices is the desire to stimulate production. Thus, prosperous periods are usually assumed to be accompanied by rising prices, while depressions are accompanied by falling prices. Prosperity can be achieved, it is assumed, through the stimulating effect of the rise in prices caused by monetary expansion. Thus, rising prices are favoured because they mean the prospect of higher turnover, higher profits and lower risks. A rising price level is indeed a very powerful stimulus to trade.