Effects of Inflation Essay Example for Free

Effects of Inflation Essay Keeping Inflation under control is a primary concern for the Australian Government as it affects so many different parts of the Economy, including Economic growth, standard of living and unemployment. There are three types of inflation, depending on their causes. Firstly, demand pull inflation occurs when there is an excessive aggregate demand at or near full employment. If aggregate demand exceeds aggregate supply, prices of g’n’s rise as a rationing mechanism. This form of inflation is usually associated with periods of high economic activity. Secondly is cost-push inflation. If business costs such as the cost of wages or materials rise, businesses may aim to maintain profit levels by passing these costs onto consumers. This will result in higher prices and therefore inflation. The final type of inflation is imported inflation. Imported inflation occurs when the price of imports rises, and either adds to business costs (resulting in cost-push inflation) or feeds into the CPI as the price of final goods. Furthermore, a depreciation in the Au$ will raise import prices, also adding to imported inflation. There are a number of factors which may cause inflation in the Australian economy. A major cause of demand-pull inflation is excessive growth in aggregate demand. If aggregate demand increases from AD to AD1, aggregate supply which is the equivalent of real GDP will rise to GDP2 and the price level will rise from P to P2. This results in the inflationary gap of cd. This increase in aggregate demand may be the result of a number of factors, including increases in consumption expenditure, investment spending, net government expenditure, the money supply, or export incomes. Another major cause of inflation, this time cost-push inflation, is a decrease in aggregate supply. If aggregate supply decreases from AS to AS1, real GDP will decrease to GDP2 and the price level will rise to P1. This results in both a contraction in real GDP and a rise in inflation. The main causes of this decrease in aggregate supply is excessive wage growth not accompanied by productivity increase, a rise in the cost of raw materials, and other inputs, or a rise in government taxes or other charges that raise costs for firms. Cost-push inflation may also be the result of imported inflation it there is a rise in world prices of imported goods used in the production process (such as raw materials and intermediate goods) firms are likely to pass these costs onto consumers, resulting in inflation on the other hand if there is a rise in world prices of consumer goods, increased import prices will feed directly into the CPI, also resulting in inflation. Furthermore a depreciation in the Au$ in foreign exchange markets will result in a rise in the prices of imported raw materials, intermediate goods, and consumer goods, again contributing to Australia’s inflation. This is demonstrated in the stimulus when the RBA credits the decrease in inflation to the fading impact of 2000s exchange rate depreciation. A less common cause of inflation is the existence of monopolies or oligopolies. If a monopoly or oligopoly exists in an industry, the lack of competition allows producers to push up prices. This again results in inflation. The final cause of inflation in Australia is inflationary expectations. Inflationary expectations refer to the behaviour of individuals and businesses who seek to compensate for the current inflation, as well as expected future price rises. This may be the result of either firms pushing up prices, or wage earners seeking higher nominal wages. Also, if consumers expect future prices to rise, they rather buy g’n’s now, which leads to increases in spending. This results in demand-pull inflation. Inflation can impact the economy in 3 ways. 1)By encouraging investment in speculative and unproductive activities and discouraging investment in ventures considered productive. Inflation encourages investment in real assets such as gold and real estate because they are considered ‘good shelters’ for inflation. This is because the scarcity of them often outpaces or at least keeps pace with the rate of inflation. If inflation occurs, people will seek to own such assets, shifting resources to these speculative and unproductive assets. Similarly this discourages investment in other assets. This is because entrepreneurs will not think it is financially viable to invest and pursue a project that will only result in less profit, due to the higher costs of inflation. Similarly inflation increases the cost of production thus also discouraging entrepreneurs. For example, if inflation is high, people will invest in gold and real estate. Otherwise known as the opportunity cost, because people will allocate their resources into such ventures (gold and real estate) they must then forego investing into other ventures that are considered productive such as a new business, that may be producing capital goods or normal goods and services. Also by discouraging entrepreneurs is the rise in the costs of production that occur due to inflation, for example the raw materials. Similarly interest rates will rise, making it more expensive to borrow funds for investment purposes, making investment projects less profitable. Either way, inflation can cause a loss in production of capital goods, leading to lower living standards in the future, or a loss in the production of normal goods and services, leading to lowering current living conditions, as current needs and wants go unsatisfied. Since returns from productive capital take longer to materialise, it means that entrepreneurs are also faced with a lesser return. This means that if the rate of inflation is greater than the return offered by the investment, then the project will not be considered economically viable, nor worthwhile. Similarly the risk of loss from any investment project will grow with inflation. Many small businesses take a couple of years before they start to make a profit, so if inflation is high, and is was not taken into account when the business was first planned, then the cost of production may rise, and the resulting price for the commodity will be too high for consumers. ) If inflation is present and is greater than that overseas, it reduces the overseas competitiveness of the Australian economy. This is because inflation is not only associated with a rise in prices, but also an increase to the costs of production. Therefore making overseas exports cheaper to the domestic market. Similarly the overseas firms do not have to put up with the rises in the costs of production. This provides a leakage in the circular flow (p urchase of exports) and thus dampening demand in the domestic market, which if severe enough could lead to a recession, bringing with it many economic problems. An example of how inflation can lead to a recession, would be the 1970s, when high inflation averaged at 10. 4%. Which due to the high oil prices and strong domestic demand led to high inflation in the 1980s (8. 1%). This period of high inflation led to a dampening in spending and a recession in the 1990s (1990-1992) causing many problems such as unemployment. 3) It also creates many winners and losers in the economy. Those that benefit are the owners of real assets (real assets and gold), because their assets are worth more. As well as those belonging to well-organized groups who can demand wage increases (eg, strong trade unions. ) This can lead to rapidly rising wages, increasing the costs of production, and also discouraging investment in productive capital as mentioned above. In addition to this inflation can benefit people who have already borrowed funds because the cost of repayment, represent less as inflation rises. This is because inflation is defined by a loss in the real value of money, therefore the repayment will diminish over time. Conversely inflation disadvantages those on fixed incomes because they lose the real value of income as their money represents less purchasing power. Similarly for the same reasons it disadvantages those that keep their money in liquid form (ie, bank deposits). Also those that lend money receive less back in terms of repayment, due to the loss in value (eg, A mortgage repayment in 1960 was worth more than in 1980, where high inflation had occurred). Also since it reduces international competitiveness, inflation can disadvantage exporters who find themselves with less business opportunities. This can effect the economy, as overseas markets will not purchase Australian goods and services. Therefore the economy will not receive the injection into the circular flow that it would usually, without inflation. Without the strong domestic support that is present in Australia’s economy, the economy could have the effect of dampening economic activity, and aggregate demand. When inflation occurs in the Australian economy it usually had a number of causes. The main causes are excess aggregate demand, cost-push inflation, inflationary expectations and imported inflation. inflation disadvantages many groups in the economy, who in turn benefit other groups. This is because inflation can influence the allocation of resources in regards to encouraging and discouraging investment, the overseas competitiveness of the Australian market, as well as effecting individuals and firms, who often benefit at the expense of others.

How the Media Distorts Male Self-Perception Essay -- Exploratory Essay

How the Media Distorts Male Self-Perception Women are insecure. They constantly diet and scrutinize their bodies. They fall victims to the anorexically thin models appearing in the media. Why do men have it so easy? For years these questions are what women asked themselves. In a world where appearance is everything, women have been the main source of all the hype concerning the image and body. Advertisements have been criticized for years about putting the pressures of the â€Å"perfect† body into the heads of millions of women. Up until a few years ago, it was believed that only women had the eyes of society on them. Now the scales are balancing. More men are beginning to feel pressured, by the same society, to have a muscular body and to portray a perfect male image. However, some men are taking this pressure to the extremes. The media is having a negative effect on the way men view their bodies making them feel as if they need to look like the models shown, which can often result in muscle dysm orphia. Through exposure to the media, primarily advertisements and movies, the physical appearance of the male body has drastically changed, from barely seeing the torso to men in their briefs. In past decades, the male body was portrayed in a â€Å"rugged† sort of way (Luciano 4). It didn’t matter how many muscles the man had or the degree of atonement, but the way that the man carried himself. He was his own seller in a busy market. If he wanted to appear tough and manly, the way he presented and carried himself would make all the difference. For example, in the first two Rocky films, Rocky, played by Sylvester Stallone, is â€Å"beefy† yet buff (Law). He is the idol of women portrayed as ... ...s in Magazines.† Journal and Mass Communication Quarterly. Autumn 2002: 697-711. ABI/INFORM Global. Proquest Horn Lib., Babson Park, MA. 11 Feb.. 2003 . Luciano, Lynne. Looking Good: Male Body Image in Modern America. New York: Hill and Wang, 2001. Olivardia, Roberto. â€Å"Muscle Dysmorphia in Male Weightlifter: A Case Control Study.† American Journal of Psychiatry. Aug 2000: 1291-6. ABI/INFORM Global. Proquest Horn Lib., Babson Park, MA. 11 Feb 2003 . Pope, H.G.. â€Å"Muscle Dysmorphia: a New Syndrome in Weightlifter.† British Journal Of Sports Medicine. Oct. 2002: 375-8 Expanded Academic ASAP. Infotrac. Horn Lib., Babson Park, MA 11 Feb 2003

Impact of State Aid on Aer Lingus Essay

Aer Lingus is an airline in the republic of Ireland with a rich history that spans for a period exceeding 66 years. It’s an airline that is thought to hold a very special place in the hearts of most Irish people. In recent times, the airline has experienced difficulties. For example, there were agricultural problems both in England and in Ireland due to the emergence of BSE and Foot and Mouth disease. These are problems that caused the numbers of passengers traveling to various countries to go down. In 2001, workers were in strike due to salary issues and this adversely affected the operations of the Aer Lingus. Global economic crisis emanating from the most powerful economy in the world, the United States together with the September 11 terrorist attacks made many holidaymakers and seasoned passengers to panic and they thus feared traveling. Moreover, lack of funds has been another major problem and this is something that made Sabena and Swissair to close down because of insufficient funds. In fact, this is a problem that was so dangerous to many organizations that even Sabena had gone bankrupt. Due to such events, the major debate has been whether to provide state aid to Aer Lingus or not. The EU has been in the frontline to state that there is no need for the airline to be provided with state aid. On the other hand, some believe that since the government is a shareholder in Aer Lingus it should then use some of the tax payers’ money to inject more cash into the company to save it (Mulcahy, 2002). Since this is a state owned airline, its dependence on aid to raise capital has creates several problems for it. The financial performance of the airline has been undermined for quite a long period of time due to this dependence. However, in comparison to the private sector, state aid in most cases involves writing off the debts to financial institutions like banks. If it were the private sector on this issue, they would not have taken the consideration that such debts may be written off. The idea to use state aid for Aer Lingus may be seen as a bad option. This is so because if it was a private investor at Aer Lingus and they encountered huge debts, such an investor would have considered liquidating the airline and starting all over again using the available assets. But this has not been possible for Aer Lingus since its dependence is on the state to provide it with aid (Doganis, 2001). In 1994, the European Commission sought to approve the guidelines on evaluation proposals relating to state aid for airlines. Approving of the aforementioned proposals would see several conditions being imposed. For example, by relying on state aid, Aer Lingus is going to face the condition that it mustn’t expect additional aid in the coming future. Moreover, state aid according to the commission is not supposed to be used in any way to increase Aer Lingus capacity that may be to the detriment of EU competitors. Moreover, if Aer Lingus obtains this aid, the offer it has in the EU market is not supposed to increase faster compared to overall traffic growth. Aer Lingus is also not supposed to use the state aid to increase its direct competition against other airlines (Doganis, 2006). The impacts of state aid on Aer Lingus did not come with negative effects alone as aforementioned. There has been a success story to tell after state aid that was approved by the EU in mid 1990s. Even though reconstruction success at Aer Lingus took longer compared to Iberia and Air France, cost-cutting was achieved in years 2002 and 2004. State aid that Aer Lingus had received a decade ago had enabled it to survive most crises of that time. Up to early 2005, Aer Lingus still had not been privatized despite the crisis. Early 90s posed problems for Aer Lingus that are still similar to the current problems. The company lost profits amounting to 7% and talks embarked to seek a merger with Ryainar but this did not bear fruits. The management team came up with a recovery plan but the profits realized were still down. This is a problem that continued in 1992 but the appointment of Bernie Cahill as the board chairman saw the government provide more investment in the airline. After the proposal was accepted by the EU, some assets like the computer company and hotels were sold. By 1995, the company realized some profits. These shows the impacts of the state aid on Aer Lingus have been both positive and negative. But for Aer Lingus to survive in the market state aid is required since today, it estimated that the company is losing $2m in a single day. Moreover, the bookings have gone down by a staggering 80% (Barrington and Sweeny, 2001).

“When Your Conscience Says Law Is Immoral, DonT Follow

â€Å"When your conscience says law is immoral, don t follow it.† (Washington v. Glucksberg, n.d) This line, originally from Jack Kevorkian seems to resonate deeply with the proponents of legalizing marijuana use, despite it originally referring to assisted suicide. The legalization of marijuana use had become one of the biggest hot button issues of the last decade, and is being fiercely debated across the United States. First made illegal in 1970 with the passing of the Controlled Substances Act, which declared it an addictive drug with no medical value, many are now fighting against this law, citing medicinal uses and an apparent lack of fierce addictiveness. Since 1996, 23 states have passed laws allowing for medicinal use of marijuana,†¦show more content†¦The other side of pro legalization are those who seek full legalization of the drug for recreational, as well as medical, usage. Recreational marijuana should be understood as marijuana that has not been recomme nded for use by a medical professional, and is used solely for the psychoactive properties that it contains. But is the morality between these two camps really any different? Is using marijuana for the medicinal purpose alone any different, when looking at it from an ethical standpoint, then using it for enjoyment? By examining this issue through several different ethical theories, it becomes clear that there is a distinct difference in the morality between medical and recreational use. Medical use of marijuana is moral. In some cases, it allows users to live a relatively normal life, while in other cases it gives users a reduction in pain as they approach the end of their lives. However, recreational use of marijuana is not moral. Unrestricted use for no medical reason can be destructive and addicting, despite the momentary pleasure it may bring to the user. Pleasure is the basis for one of the main ethical theories, hedonism. As one of the simplest ethical theories, it is probably the best place to begin our examination. Hedonism is one of the oldest of philosophical theories, dating back to the ancient Greeks. As Schafer-Landau (2015) explained, â€Å"Epicurus (341-270 BCE), the first great hedonist, argued that pleasure was the only thingShow MoreRelatedComparison Essay in Victorian Plays1372 Words   |  6 PagesPoint | Quote from Lady Windermere’s Fan | Analysis | Quote from Mrs. Warren’s Profession | Analysis | There are double-standards on society’s judgement of morality towards men and women | Action taken towards Lord Windermere when suspecting his involvement with Mrs. Erlynne-â€Å"take Windermere away at once to Homburg or to Aix, where he’ll have something to amuse him† and â€Å"feed the wretches well†vs. society’s view on Mrs. Erlynne upon suspecting her scandal-â€Å"these wicked women get our husbands awayRead MoreKant Vs. 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