Should the central bank aim for zero inflation (Economics) Essay

Should the central bank aim for zero inflation (Economics) - Essay Example rcent inflation rate would not be in line with the natural rate of unemployment in the country therefore targeting a zero percent inflation would not serve the interests of the economy. A dominant economy phenomenon before great depression was the fact that there was a deflation in the economy as the prices tend to come down rather than go up however after the happening of Great Depression, a new phenomenon of inflation emerged under which prices showed the tendency to increase over the period of time rather than decrease. Increase in general price level or inflation have very threatening impacts on the economy as it not reduce the purchasing power of a consumer but it also reduce the competitive advantage of the countries as rising inflation would make the goods and services of that country more expensive hence less competitive in international market. Thus the question arise for the monetary policy experts of the country as to what level of inflation within the economy can be achieved in order to keep the competitiveness of the economy intact. The argument which is often brought forward in order to bring the price stability is the fact that price stability can not be achieved without sacrificing the employment level in the country. Thus there is a negative relationship between the inflation and unemployment in the country. If policy makers tend to contain the inflation down, the unemployment levels in the economy would increase and similarly if fiscal and monetary policymakers aim to achieve the low unemployment level in the country, inflation is going to increase. (Gramley). â€Å"Economists label the relationship between inflation and unemployment the Phillips curve. According to NAIRU, the Phillips curve is vertical; its verticality indicates that if the central bank (i.e., the Fed) increases inflation, there is no reduction in the unemployment rate. Similarly, lowering the inflation rate also has no effect on unemployment. This means that the inflation rate

Economic development in bahrain Essay Example | Topics and Well Written Essays - 2500 words

Economic development in bahrain - Essay Example Her population is 1.05 million with birth rate of 18 per 1000, death rate 4 per 1000, life expectancy is 74.7 years, birth rate is 2.6 children per woman, and literacy rate is 86.5 percent. It is mainly a Islamic country with 81.2 percent Muslims with ethnic groups like 62.4 percent Bahraini, 37.6 percent non-Bahraini, 9 percent Christian and 9.8 percent others (Bahrain, n.d.) Bahrain also known as al-Ihsa (Arabic) is a coastal town bounded by the Pursian Gulf on the east with Iraq above and Oman below is famous for its pearls (Nadwi, 1936, p.24). The history of this Arabian country finds it roots back in 2300 B.C. The land of Bahrain was the hub of ancient civilization of Dilmun, a pronominal trading center at that time connecting the civilization of Sumeria in Mesopotamia with the Indus Valley in India. After the degeneration of the civilization of Dilmun in 600 B.C., the most phenomenal incident which took place there was the overtaking of Bahrainian rule by the Carmathians (half-muslim, half -Magians) during the Muslim age and they established this place as their central political arena. The Carmathians were dethroned by the Sunni rulers in 976 and developed a powerful Muslim rule there. The pearl treasure of Bahrain became an immense attraction for the foreign invaders and plunderers as a consequence of which many foreign rulers ruled this place for a significant time period like during the 13th and 14th century the Mongols ruled there who were dethroned from their powers by Portuguese invasion in 1521 who ruled for about a century and then taken over by Bahranian rule which was followed by Omanian rule for some time then for a certain period of time the Persians ruled who were defeated by Al Khalifa clan invasion in 1783. Although the Al Khalifans were removed by the sultanate of Oman for some time they regained power in 1811. On the other hand the colonial expansion of Great Britain imparted its focus toward