0
No. They are not functions of one another.
Wiki User
∙ 13y ago
Add your answer:
Earn +20 pts
Disadvantages of economic growth?
there are much disadvantages of economic growth and we can't cover here so,inflation,intergovernmental destruction, traffic congestion and population increase.
What is the effect of inflation on GDP?
The increase in GDP over time has two components -- real growth in economic activity, and inflation. Inflation affects GDP because GDP is measured in dollars (or some other country's currency as appropriate), therefore dollar-inflation by itself would cause an apparent increase in GDP. Economists generally correct for inflation and discuss "real GDP" when talking about economic growth. Nominal GDP is the number we "see" and count every quarter, and it's then corrected for inflation to arrive at real GDP growth, which is then reported by the government. But nevertheless, inflation alone makes the nominal GDP grow even without real growth. I.e., if you were to pull out a news article reporting the GDP from 10 or 15 years ago, the stated number would be so much lower than now, that REAL economic growth cannot account for the increase between now and then. Much of the increase is due to inflation, because that report would be reporting the GDP then, based on that era's dollar-values. - by Spotty j from yahoo . I did not make this up. the credit for this goes to spotty j Your question needs elaboration because inflation does not necessarily affect GDP. Inflation is the measure of a sustained increase in prices over a long period of time. GDP is the amount of the market value of all final goods and services produced within a country in a given period of time: GDP = consumption + investment + government spending + (exports − imports). Attached is a link to the Federal Reserve Bank which illustrates in easy terms how inflation works in the overall economy. As Yahoo questions go, this is intense stuff! Maybe you should try People Magazine to pique your interests.
Is inflation always bad for economy?
Inflation is certainly not always bad for economy, in fact a moderate level of inflation matching to it's growth rate is good for the country. Moderate inflation suggest demand in the system while no inflation or deflation suggest demand collapse which is much more dangerous than Inflation. For Instance US inflation is 1.5 to 2% while it's growth is 2-3%. This equation is ok. A Country having an inflation equal to it's growth rate is not bad though it is always preffered to have lower inflation and high growth rate. But it is difficult to achieve on a continuous basis. Reserve banks all over the world prefer and try hard to have moderate inflation and would worry if there is a situation of deflation. But too high inflation will make the currency of the country very weak against the major global currencies and will bring the economy to it's knees, like what happened in case of Zimbabwe.
How do you control inflation in Nigeria?
Monetary PolicyWith growth of 3.8%, demand in the economy could be growing faster than capacity can grow to meet it. This leads to inflationary pressures. We can term this demand pull inflation. Therefore, reducing the growth of Aggregate demand, should reduce inflationary pressures.The Central bank could increase interest rates. Higher rates make borrowing more expensive and saving more attractive. This should lead to lower growth in consumer spending and investment. A higher interest rate should also lead to higher exchange rate, which helps to reduce inflationary pressure bymaking imports cheaper.Reducing demand for exports andIncreasing incentive for exporters to cut costs.Fiscal PolicyThe government can increase taxes (such as income tax and VAT) and cut spending. This improves the budget situation and helps to reduce demand in the economy.Both these policies reduce inflation by reducing growth of Aggregate Demand. In Nigeria's case, the economy seems to be growing reasonably strongly. Therefore, we can reduce inflationary pressures without causing a recession.If Nigeria had high inflation and negative growth, then reduce aggregate demand would be more unpalatable as reducing inflation would lead to lower output and higher unemployment. They could still reduce inflation, but, it would be much more damaging to the economy.
How does inflation affect farmers?
Effects of inflation on Farmers:The price of farm products goes up faster than costs. Costs lag behind prices of product received by the farmers. It has been observed in India that inflationary tendencies during war and post-war periods have helped farmers in paying off their old debts. Moreover, farmers are generally debtors and have to pay less in real terms, while the land revenue, taxes, etc., do not rise much. Thus farmers generally gain during the periods of inflation.
Disadvantages of economic growth?
there are much disadvantages of economic growth and we can't cover here so,inflation,intergovernmental destruction, traffic congestion and population increase.
How does inflation change economic choices?
As inflation rises, the cost of items increases because the currency is not worth as much as it was before inflation. When prices rise, economic choices available to people become more limited.
What economic problem in the 1970s became much less significant during the Reagan years?
Inflation
What are the two ways to measure economic growth Why is economic growth important What are the two sources of economic growth?
ways to measure economic growth:1 GDP- gross domestic product2 GNP- gross national productThese show how much money is flowing around the economyhope this helps
Much of the economic growth of Texas is based on which commodity?
Oil
What is the effect of inflation on GDP?
The increase in GDP over time has two components -- real growth in economic activity, and inflation. Inflation affects GDP because GDP is measured in dollars (or some other country's currency as appropriate), therefore dollar-inflation by itself would cause an apparent increase in GDP. Economists generally correct for inflation and discuss "real GDP" when talking about economic growth. Nominal GDP is the number we "see" and count every quarter, and it's then corrected for inflation to arrive at real GDP growth, which is then reported by the government. But nevertheless, inflation alone makes the nominal GDP grow even without real growth. I.e., if you were to pull out a news article reporting the GDP from 10 or 15 years ago, the stated number would be so much lower than now, that REAL economic growth cannot account for the increase between now and then. Much of the increase is due to inflation, because that report would be reporting the GDP then, based on that era's dollar-values. - by Spotty j from yahoo . I did not make this up. the credit for this goes to spotty j Your question needs elaboration because inflation does not necessarily affect GDP. Inflation is the measure of a sustained increase in prices over a long period of time. GDP is the amount of the market value of all final goods and services produced within a country in a given period of time: GDP = consumption + investment + government spending + (exports − imports). Attached is a link to the Federal Reserve Bank which illustrates in easy terms how inflation works in the overall economy. As Yahoo questions go, this is intense stuff! Maybe you should try People Magazine to pique your interests.
How much currency can be printed in India?
No Limit..........but it will lead to Inflation,that will cause decrease in currency value
Is inflation always bad for economy?
Inflation is certainly not always bad for economy, in fact a moderate level of inflation matching to it's growth rate is good for the country. Moderate inflation suggest demand in the system while no inflation or deflation suggest demand collapse which is much more dangerous than Inflation. For Instance US inflation is 1.5 to 2% while it's growth is 2-3%. This equation is ok. A Country having an inflation equal to it's growth rate is not bad though it is always preffered to have lower inflation and high growth rate. But it is difficult to achieve on a continuous basis. Reserve banks all over the world prefer and try hard to have moderate inflation and would worry if there is a situation of deflation. But too high inflation will make the currency of the country very weak against the major global currencies and will bring the economy to it's knees, like what happened in case of Zimbabwe.
When GDP growth is high are prices high?
There does not have to be any correlation between the two. High inflation, on the other hand, will decrease purchasing power if salaries don't go up as much as the inflation.
How do you control inflation in Nigeria?
Monetary PolicyWith growth of 3.8%, demand in the economy could be growing faster than capacity can grow to meet it. This leads to inflationary pressures. We can term this demand pull inflation. Therefore, reducing the growth of Aggregate demand, should reduce inflationary pressures.The Central bank could increase interest rates. Higher rates make borrowing more expensive and saving more attractive. This should lead to lower growth in consumer spending and investment. A higher interest rate should also lead to higher exchange rate, which helps to reduce inflationary pressure bymaking imports cheaper.Reducing demand for exports andIncreasing incentive for exporters to cut costs.Fiscal PolicyThe government can increase taxes (such as income tax and VAT) and cut spending. This improves the budget situation and helps to reduce demand in the economy.Both these policies reduce inflation by reducing growth of Aggregate Demand. In Nigeria's case, the economy seems to be growing reasonably strongly. Therefore, we can reduce inflationary pressures without causing a recession.If Nigeria had high inflation and negative growth, then reduce aggregate demand would be more unpalatable as reducing inflation would lead to lower output and higher unemployment. They could still reduce inflation, but, it would be much more damaging to the economy.
What has the author William Russell Easterly written?
William Russell Easterly has written: 'The Soviet economic decline' -- subject- s -: Economic conditions, Econometric models 'Life during growth' -- subject- s -: Economic development, Income distribution, Quality of life 'Economic stagnation, fixed factors, and policy thresholds' -- subject- s -: Mathematical models, Economic policy, Economic development, Foreign exchange 'Money demand and seignorage-maximizing inflation' -- subject- s -: Econometric models, Demand for money, Inflation - Finance - 'Good policy or good luck?' -- subject- s -: Econometric models, Prices, Economic development 'Tropics, germs, and crops' -- subject- s -: Agricultural ecology, Diseases, Economic aspects, Economic aspects of Diseases, Economic conditions, Economic development, Economic geography, Natural resources, Tropics 'The elusive quest for growth' -- subject- s -: Poor, Economic policy, Poverty 'When is fiscal adjustment an illusion?' -- subject- s -: Budget deficits, Finance, Public, Fiscal policy, Public Finance 'How much do distortions affect growth?' -- subject- s -: Mathematical models, Economic development 'Services as a major source of growth in Russia and other former Soviet states' -- subject- s -: Economic policy, Privatization 'Marginal income tax rates and economic growth in developing countries' -- subject- s -: Income tax, Mathematical models, Developing countries, Economic policy 'The ghost of financing gap' -- subject- s -: Development economics, Mathematical models, Developing countries, Economic development, Economic policy,
How does inflation affect farmers?
Effects of inflation on Farmers:The price of farm products goes up faster than costs. Costs lag behind prices of product received by the farmers. It has been observed in India that inflationary tendencies during war and post-war periods have helped farmers in paying off their old debts. Moreover, farmers are generally debtors and have to pay less in real terms, while the land revenue, taxes, etc., do not rise much. Thus farmers generally gain during the periods of inflation.
