Deflation or decreasing cost of living can cause the economy to slow and produce unemployment so central banks, like the FED in the US, try to maintain a small positive increase in the cost of living, that is a low inflation rate. They do this by controlling the interest rate, and sometimes they make mistakes, or unexpected events will cause the price to increase for an essential product (usually oil) which will produce large increases in the price of many other goods
2007-11-17 09:30:52
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answer #1
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answered by meg 7
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Our increasing income gives a signal to those who provide goods and services which we need to "live" - why not to charge more if there is ability to pay? This leads to an increase in prices which is eventually aggregated and reflected in the rise of CPI - the cost of living.
2007-11-17 13:15:18
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answer #2
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answered by ArArAt 3
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Greed and capitalism.
People want more, so they put their prices. When the prices of everything in the chain have gone up, everyone is one step higher up the ladder and nobody is any better off, so people want more pay to buy the same stuff. Employers have to charge more to cover the pay rise and off we go again.
Everyone wants more but in the end nobody is any better off, and those on low or fixed incomes are generally worse off.
It's called inflation, and economies rarely go the other way, except catastrophically.
2007-11-17 06:23:04
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answer #3
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answered by Borogrove 3
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Because people are greedy Higher wages make goods more expensive. If people worked harder and longer hours to earn more money then goods prices would stay the same. Also the oil suppliers are greedy which makes raw materials more expensive
2007-11-17 06:24:43
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answer #4
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answered by rocky 3
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Inflation.
(To actually go into inflation and possible causes, would be too lengthy and would probably require writing a book. You can find information online about the causes of Inflation.)
2007-11-17 07:31:32
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answer #5
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answered by Nep 6
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cos the government are greedy x
2007-11-17 06:16:11
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answer #6
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answered by atlantis 4
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no idea. It's far too much.
2007-11-17 06:16:35
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answer #7
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answered by Mr-Kay 7
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