Inflation and Investment Essay

Inflation Poses Serious Threats to Government is an article by Leigh Thomas create by Agence France Presse. It deals with section three in the couse companion, Macroecnomics. The article details the negative effects of inflation and what has caused it. Foreign Buyers Snap Up Us Real dry land is an article by Stephanie Armour published by USA Today. It deals with section 4, International Trade. It deals with why U.S real solid grounds are urging Foreigners to buy property in the U.S.The article Inflation Poses Serious Threats to Government focuses on the causes of inflation and the factors that lead to it. Good prices have lifted the inflation rates in Europe. European Unioins Eurostat agency said that inflation hit 3.6 percent. Economist Sonil Kapadia s tated that food and oil Prices are the main driers of inflation. Food prices move 21 percent in China. The oil prices have caused a major dilemma by cutting extra consumer cash and affecting the poor countries negatively. Economis ts say tat inflation rest might be on the way in the coming months. In addition, inflation threatens economies in Af rica by encouraging governments to take knee-jerk reactions to cope with stress. Real estate agents urge foreign consumers to by land in the United States.The agents are even willing to pay for the air tickets and hotel bills. Because the dollar hit a newfangled grim against other currencies, the price of home will be cheaper for foreigners a discount of 30 percent. This activity is mainly happening in tourists area with crank weathers such as New York and San Diego. Jacky Teplitzky, a real estate agent, said that sales for foreigners rose from 10 percent to 25 percent in the old year. too, to help attrack foreign buyers, such firms hire foreign speakers in order to translate. Wohlfarth, owner of Wohlfarth & Associates, believes sthat people are diversifiying their investments by buying more land.Inflation cod to the rise in food and oil prices has caused disas trous results in the world, especially in poor countries. Oil is often demanded but there is little supply. So this is a type of demand-pull inflation. To reduce aggregate demand, a government could use deflationary fiscal policy, increasing taxes and lowering government spennding and/or deflationary pecuniary policy, which is rasising interest rates and reducing the m onenessy supply. iF all oil producing cuntries increase the output without using more costs, then prices for oil wouldnt necessarily rise. This is Elasticity of supply. Also Elaasticity of demand may help prevent inflation.If the goods were elastic then buyers will resist the price rises. If there are a lot of substitutes for a definite product, then buyers will simply switch spending away from the more expensive products. So if food prices are increasing, it is advised that consumers switch to another brand, if one exists. It is an advantage for both the U.S and the foreign buyers that buy land now in the U.S. But t his is occuring because the dollars value is sinking. To improve the economy more efficiently, it is best if the dollar rose its value. THe dollars low value may help real estate agents to buy more land but in the mean time, inflation could arise because of the low value of the dollar. IT wiould help if money market investors shift to the dollar for low interest rates.