Macroeconomics Essay

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Introduction Let’s look back twenty years back, a bowl of noodle is only RM 0.50 while in the present, it will goes up to RM 5.00. Clearly, we have been through a lot of inflation, although we all know about inflation that sometimes really unavoidable. But if economist able to predict when and how serious can be an inflation, government will be able to perform some preventive measure or measurement to overcome inflation. Question (a) Inflation no longer anything new to us, what we are using everyday its getting much more expensive compare to our parents generation. There are few reasons that caused such inflation. The first type of cause of inflation is Demand-Pull Inflation; it is the most common inflation type we can see by our own eyes. Demand-Pull Inflation can be define as when a service or products being demand so much until it outstrip supplies. When such incidents happen, seller may realize that goods are selling fast but the demand of the goods did not lower, therefore, they might take this opportunity to increase the selling price of the goods. So long the inflation stays within limit; this could actually benefit the market growth. The most common example of demand-pull inflation would be in festive seasons. When such season arrived, price like chicken or seafood usually will become more expensive, it is due to the demand of such products is getting more but numbers of supplier that are supplying such products remain unchanged, therefore supply of products are lesser than demand. In Malaysia, government has imposed law to such products as control items whereby selling price will have a limit, government set a price ceiling as a way to control and maintain the selling price within the limit to protect consumers. When economic is growing, same incident might happen as people have more spending power to buy more products, demand of goods increase,

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