Legal and Ethical Leadership and Management

Inflation and Government Economic Policies

Tanya D Spencer

Argosy University

Professor Waters

February 5, 2012

Inflation is the financial rise of goods for merchandise being import or exported into America that can build the economy up or break the economy down. Example of this is the cost gas in the last month has rose by charging 3% sale tax. There are many causes of inflation; supply and demand is one factor because demand pulls inflation. People have a large demand for gas, for example of that is gas is used for household, and driving. Another cause of inflation is a decline in productivity. The desirability of inflation is depended on the situations and the short-term, inflation is beneficial toward someone who is a borrower then the lien holder, and long-term inflation could affect the borrowers due to the fact that may have to pay high interest rate. If the people control the situation then yes inflation is desirable, but if the market control situation the then inflation is not desirable because market prices are going to be driven up to cost the people more money. If people purchase item that are not sell well that can help control inflation, example of that will buying off brand items.

The Consumer Price Index (CPI) is a measure cost of a fix good to consumer over a period of time, for instance a can of beans may cost $1.00 January and in February is may cost $.60 because less people are buying the bean.   The CPI behavior has continued to grow from 2000 until 2010, and food and beverage is the main causes of the growth of why the CPI will continue grow as you can see from the graph be low that the rise in food and beverage and things that people cannot live without.

Food and Beverage from 2000 -2010

2000 | 168.4 |

2001 | 173.6 |

2002 | 176.8 |

2003 | 180.5 |

2004 | 186.6 |

2005 | 191.3 |

2006 | 195.7 |

2007 | 203.3 |

2008 | 214.225 |

2009 | 218.249 |

2010 | 219.984 |

(Archived Consumer Price Index...