I just need a very simple answer.
2007-11-16 13:07:46 · 6 answers · asked by Umm.... Rawr. 1 in Social Science ➔ Economics
The only way that price levels can be constant is if the continuous change in demand for currency is IDENTICAL to the change in supply of currency. Any deviation from this results in either inflation (supply > demand) or deflation (demand < supply).
Since this is unrealistic, the best scenario to hope for is keeping prices "reasonably" stable by keeping changes in supply as close as possible to changes in demand.
2007-11-17 05:32:31 · answer #1 · answered by Homer J. Simpson 6 · 0⤊ 0⤋
Hedge your own asset agains inflation is the most simple answer to solve inflation TO YOU only. If you mean to solve it systemicly, there are not such an easy answer. many theory has been tried to solve it but still failed so far. Hence, one say that inflation is a by product in economic activities, just as a baby in a marriage activity
2007-11-16 23:24:18 · answer #2 · answered by rachmadi triono 2 · 0⤊ 0⤋
End the production of currency. Hjalmar Schacht did this in the 1930's that essentially turned Germany from a bankrupt nation suffering extreme hyper-inflation, into a stable world economy.
2007-11-16 23:09:38 · answer #3 · answered by austenbosten 3 · 0⤊ 0⤋
2 kinds of inflation:
Demand pull inflation: limit demand or increase supply.
Cost push inflation: reduce cost increases to produce goods and service: for instance salary caps
2007-11-16 22:54:26 · answer #4 · answered by q127 2 · 1⤊ 0⤋
The short answer to this is have societies that are not so heavily reliant on money as the common unit of exchange. Inflation occurs in the balancing of the cost of production vs the selling price (profit) vs the wage levels and resulting buying power of the individual.
The more reliant you are on yourself to provide yourself with a life, i.e. building your own home providing your own food, water, electricity, etc. etc. makes you less reliant on a process that thrives on the circulation of money.
to sum up, less profit or lower wages means low or no inflation, price rises in any area including natural resources upsets the balance and kicks off the inflationary spiral.
2007-11-16 21:31:30 · answer #5 · answered by graham a 2 · 0⤊ 2⤋
Why does it have to be solved? If you "solve" inflation, you would likely end up with unsolvable unemployment...
2007-11-16 21:57:25 · answer #6 · answered by NC 7 · 1⤊ 0⤋