Fill in order details

  • Submit your instructions
    to writers for free!

Chat with the writer

  • Chat with preferred expert writers
  • Request a preview of your paper
    from them for free

Editing

  • Project edited by the quality evaluation department

Download Your Completed Project

  • Download the completed project from your account or have it sent to your email address

How does GDP affect Inflation Rate?

The Increase in GDP implies that an economy has experienced either of following five cases:

Produced more at the same prices.

Produced the same amount at higher prices.

Produced more at higher prices.

Produced much more at lower prices.

Produced less at much higher prices.

Case 1 implies that rate of production is being increased to meet increased demand. Increased production leads to lower rate of unemployment, further increasing demand. Higher wages lead to higher demand as consumers spend more freely. This leads to higher GDP combined with inflation.

Case 2 implies that there is no increased demand from consumers, but that prices are higher. Both GDP and inflation increase in this scenario. These increases are due to decreased supply of key commodities and consumer expectations, rather than increased demand.

Case 3 implies that there is both increased demand and deficit of supply. Businesses must hire more employees, further increasing demand by increasing wages. Increased demand in the face of decreased supply quickly forces prices up. In this scenario, GDP and inflation both increase at a rate that is unsustainable and is difficult for policymakers to influence or control.

Case 4 is unheard of in modern democratic economies for any sustained period and would be a case of deflationary growth environment.

Case 5 is very similar to what the United States experienced in the 1970s and is often known stagflation. GDP rises slowly, below the desired level, yet inflation persists and unemployment remains high due to low production.

Three of these five scenarios include inflation. Scenario 1 eventually leads to inflation, and scenario 4 is unsustainable. From this, it’s clear that inflation and GDP growth go hand-in-hand.

What our customers say
_____

Ishita M.Ishita M.
Great Job! Thank you so much for your work. You got it done faster than I imagined and everything is perfect. Will definitely be using you again!
Megan J.Megan J.
"As a wife, mother, and full-time student, I was struggling to try to go back to school and take care of my responsibilities. Sometimes you just need a little help, and I appreciate all the help I have gotten from Academic Research Bureau. My papers are on-time and the writers are easy to work with. Thanks for the support!"
Rajab M.Rajab M.
Universitywritingservices.com has saved me a lot of time. I was tired of taking the same classes many times over again. As an ESL student, my professors were taking points off of my assignments for my grammar mistakes. It made it very hard to feel encouraged to continue with my studies. Thankful for having found an answer for better grades."
Frank N.Frank N.
As a working student, I just really don't have the time to write paper after paper and complete assignment after assignment. Working full-time and going to school was nearly impossible until I was able to feel comfortable with the writers on this site. They make me feel secure enough to trust them with my papers. While I'm busy with life, they are busy writing my papers. They always do an outstanding job!
Courtney B.Courtney B.
Thank you! You were really patient with me and my needs. This was my first time using you guys, however, I will definitely be using you again!
John H.John H.
I cannot tell you enough how amazing your company is! Your writers are superb, on time, excellent content, so very thankful you reached out to me that day! Lifesaver for sure! Couldn’t be happier with the results I’ve gotten from my first 2 papers with you, I have 4 papers left to go and I’ll be using your company for them all!
Rebecca T.Rebecca T.
After I ordered a dissertation from your writing service, the first paper that I was given did not met my professor’s demand. I set the paper on revision and the writer made the revision for free meeting all my requirements and I was very satisfied
Thomas R.Thomas R.
I was shocked by how your writers managed to deliver my paper on time, and I was among the best in our class in that paper. Thank you so much and I will never hesitate to use you
error: protected!!