Inflation acts as a constant companion of a market economy. The socio-economic consequences of inflation include:

1. redistribution of income and wealth in favor of a small segment of the population ;

Redistribution of income and wealth occurs, for example, when debtors become richer at the expense of creditors. The repayment of a loan for the construction of a house under the agreement occurs at constant prices, there is no adjustment for the depreciation of money. With inflation, it is unprofitable to lend at a fixed price. Inflation redistributes income from those who give money to those who take out loans. Especially with unexpected (unpredictable) inflation.

In conditions of inflation, intermediaries engaged in the resale of securities, goods, and currency become richer. As a result of increasing their tariffs, natural monopolies “profit.” All this is happening against the backdrop of losses from rising prices for civil servants with fixed salaries, pensioners, recipients of insurance, rent and utility payments.

2. price lag of state-owned enterprises from market prices , which is facilitated by their long-term nature, fixity, and inflexibility, since the increase in prices of state-owned enterprises must be justified through higher organizations. There is a growing imbalance between the private and public sectors, with state-owned enterprises suffering losses.

3. hidden state confiscation of funds from the population through taxes, while the old tax rates make even the wealthy segments of the population poorer. Progressive taxation, as inflation rises, automatically enrolls various social groups into increasingly wealthier incomes, while income rises nominally rather than in reality. The state collects an ever-increasing amount of taxes.

4. accelerated materialization of funds into goods, flight from cheaper money ; The escape from cheaper money in the USSR was the construction of dachas, the purchase of furniture, gold, etc. In the early 90s, with the fall in monetary incomes, the demand for all goods, including food, decreased, but a certain segment of the population remained in steady demand for real estate, cars, antiques.

5. instability and lack of economic information for sellers and buyers ; Prices are the main indicator of a market economy. When they grow feverishly, consumers and producers constantly make mistakes in choosing the optimal price, confidence in future incomes decreases, the population loses economic incentives, the economic activity of entrepreneurs decreases, and the efficiency of allocation of economic resources drops sharply.

6. the lag of the real interest rate for a loan from the annual inflation rate , which forces bankers to increase interest rates, loans become more expensive; Real interest = nominal interest - inflation rate percentage.

7. inverse relationship between the inflation rate and the unemployment rate . Inflation has a certain connection with employment. An increase in inflation may be combined with high employment and high production volumes, or, conversely, a decrease in inflation may be accompanied by a decline in production and a significant increase in unemployment. When inflation decreases by 1%, unemployment increases by 2%.

The negative social and economic consequences of inflation force governments of different countries to pursue certain economic policies. The state has always paid significant attention to the regulation of the money supply. Anti-inflationary policy includes a wide range of different monetary and budget measures, tax measures, stabilization programs and actions to regulate and distribute income.

Assessing the nature of anti-inflationary policy, we can distinguish three general approaches. The first (proposed by supporters of modern Keynesianism) provides for an active fiscal policy - maneuvering government spending and taxes in order to influence effective demand: the state limits its expenses and increases taxes. As a result, demand is reduced and inflation rates are reduced. However, at the same time, a decline in investment and production may occur, which can lead to stagnation and even to phenomena opposite to the initially set goals, and unemployment to develop.

Fiscal policy is also being pursued to expand demand in times of recession. If demand is insufficient, programs of government investment and other expenditures are implemented (even in conditions of significant budget deficits), and taxes are reduced. This is believed to increase demand for consumer goods and services. However, stimulating demand with budgetary funds, as the experience of many countries in the 60-70s showed, can increase inflation. In addition, large budget deficits limit the government's ability to maneuver taxes and spending.

The second approach is recommended by authors who support monetarism in economic theory. Monetary regulation comes to the fore, indirectly and flexibly influencing the economic situation. This type of regulation is carried out by a central bank not controlled by the government, which determines the issue, changes the amount of money in circulation and interest rates. Proponents of this approach believe that the state should carry out deflationary measures to limit effective demand, since stimulating economic growth and artificially maintaining employment by reducing the natural rate of unemployment leads to a loss of control over inflation.

Trying to curb out-of-control inflation, the governments of many countries, starting in the 60s, pursued the so-called price and income policy, the main task of which essentially boils down to limiting wages - the third method. Since this policy refers to an administrative rather than a market strategy to combat inflation, it does not always achieve its stated goal.

19. Economic growth: essence, indicators, factors. Types of economic growth. Quality of economic growth.

The economic growth represents the development of the national economy in which the gross national income and real gross domestic product increase as sources of satisfying the needs of society. Economic growth is usually understood not as short-term increases in the real volume of national production, but as long-term trends in the increase and qualitative improvement of the national product and the factors of its production.

Essence and the significance of economic growth lie in the constant resolution and repetition at a new level of the main problem of any economic system - the contradiction between the limited production resources and the limitlessness of human needs. Economic growth allows you to simultaneously increase available resources, current consumption, as well as new additional investments in the further development of production.

Economic growth is measured using indicator the growth rate of total income or real GDP as a whole or per capita. The growth rate of real GDP is as follows:

X = (Y t - Y t - 1) : Y t - 1,

where X ¾ growth rate of real output;

Y t ¾ real output of the current year;

Y t - 1 ¾ real output of the previous year.

Economic growth can be measured both in physical terms (physical growth) and in monetary terms (value growth). The use of any of these methods presupposes the purification of economic growth indicators from the inflationary component. For this purpose, the measurement of physical growth is given in prices of the previous period. When calculating the value increase in total income (or GDP), its value is divided by the price growth index for the noted period.

Factors of economic growth can be divided as follows:

1) supply factors (natural resources, labor resources, capital, technology);

2) demand factors (level of economic activity, cyclical fluctuations);

3) distribution factors (work motivation, social stability).

In any case, economic growth primarily depends on production capabilities and is associated with the use of the main types of production resources - labor, capital, natural (land), available in limited quantities.

Transition to new quality of economic growth means that economic development:

· carried out mainly as a result of the use of the scientific and technological progress factor ¾ the use of computer, resource-saving technologies, etc.;

· to a greater extent than in the previous period, it is associated with an increase in the quality of manufactured goods and services, which is driven by quality competition;

· has restrictions established by the government in order to protect the ecological environment of human activity (violation of these limits of economic growth is considered socially dangerous);

· has a social orientation, namely, there is an increase in social infrastructure, an improvement in the safety of working conditions, an influx of investment in human capital, a more rational use of free time, ensuring full employment of the working population, etc.

Types of Economic Growth are characterized by the following.

Extensive type economic growth involves an increase in output using additional resources: means of production, labor, additional financial resources.

Intensive type economic growth is associated with increased production efficiency. It involves increasing production output per unit of resources used and improving the quality characteristics of production. Similar processes occur:

· in using the achievements of scientific and technical progress, updating production;

· in improving the qualifications of employees;

· in improving the quality of products and updating the assortment.

Extensive and intensive types of economic growth can be combined when an increase in the scale of production occurs on a new technological and technical basis.

With extensive growth, the economy basically maintains its economic proportions, its structural characteristics and develops in breadth. In conditions of an intensive type of development, the economy becomes dynamic, not only the growth rate increases, but also progressive structural changes occur.

Related information.

Topic: Socio-economic consequences of inflation and anti-inflationary policy of the state

Type: Test | Size: 139.55K | Downloads: 114 | Added 09.11.13 at 11:29 | Rating: +5 | More Tests

University: Financial University

Work plan

1. Control theoretical question. 3

1.1. Socio-economic consequences of inflation. 3

1.2. Anti-inflationary policy of the state and its main directions. 7

2. Essay on the topic: “Features of anti-inflationary policy in Russia at the present stage. Methods of combating inflation in Russia." 10

3. Control test tasks. 17

References.. 18

1. Control theoretical question

1.1. Socio-economic consequences of inflation

Inflation— crisis state of the monetary system. It belongs to the category of severe and intractable economic diseases. No country is immune from it. Typically, inflation refers to a long-term increase in the general price level while the purchasing power of money decreases. The inflation process is much more complex and cannot be reduced to a simple change in the relationship between goods and money.

Inflation is a monetary phenomenon. More specifically, the depreciation of money, which occurs due to the fact that there is more of it in the economy than is needed. Inflation is expressed in a long-term general disequilibrium of markets towards demand. Thus, inflation is a depreciation of money that is accompanied by a violation of the laws of monetary circulation and the loss of all or part of its basic functions by money. In its extreme manifestation, inflation leads to a loss of confidence in banknotes and the revival of natural exchange.

To measure inflation, price indices are used, the main ones being the consumer price index and the GDP deflator. The inflation rate indicator reflects the growth rate of the level of consumer prices over the period under study. To measure the inflation rate, the following indicator is used:

where is the growth rate of the average level of consumer prices;
and — consumer price indices of the study and base year. The consumer price index is calculated by comparing the cost of the consumer basket in the year under study with the cost of the same basket in the base year:

where is the consumer price index; — the cost of the basket of consumer goods in the year under study; — the cost of the basket of consumer goods in the base year. The consumer price index acts as an index of the cost of living and allows you to assess changes in real incomes of the population. To measure the price level in the economy as a whole, an indicator is used - the growth rate of the GDP deflator or the inflation rate:

where is the inflation rate; and is the GDP deflator in the study year and in the base year.

So, the rate of inflation is measured in the national economy as a whole using the GDP deflator, and at the level of population consumption - using the growth rate of the consumer price level.

Inflation has a whole range of negative effects on the course of economic development:

1. Rising prices lead to depreciation of unused capital.

2. People who lend their savings lose from inflation.

3. Inflation reduces the motivation to work, because it undermines the possibility of normal realization of earnings.

4. High inflation rates lead to a “flight” of capital abroad.

5. Exports are reduced and imports are increased, the balance of payments deficit is growing, proportions are being violated, the disorganization of the economy is increasing, and public wealth is being destroyed.

6. The standard of living of the population is falling, personal savings are depreciating, and current consumption is decreasing.

7. There is a rapid social stratification of the population and deepening property inequality.

8. Uncertainty and uncertainty about the future increases, and the risk of business activity increases. Investments are redistributed from long-term objects to short-term ones and acquire a speculative orientation. A significant part of capital leaves the sphere of production and rushes into the sphere of circulation and the financial sector of the economy.

9. Inflation prevents the economy from emerging from the crisis, unemployment is growing and social problems are worsening.

10. Uneven price growth increases disproportions between sectors of the national economy.

11. Inflation weakens the position of power structures. Confidence in programs and activities planned and implemented by the government is declining. The population's reaction to worsening conditions in the consumer market and in production is taking on acute forms.

12. The uncertainty and unpredictability of future economic development lead to changes in the economic interests of the population, social conflicts, personal and family tragedies, an increase in crime and a decline in the moral foundations of society.

Thus, the list of negative consequences of inflation is very long. And yet the main problem is that inflation makes the national economy poorly managed.

One of the difficult issues in economic policy is managing inflation. The entire arsenal of means to combat inflation is divided into:

Anti-inflationary strategy, providing long-term goals and methods;

Anti-inflationary tactics that produce results within a short period of time.

The anti-inflationary strategy consists of dampening inflation expectations in order to change the psychology of buyers, relieve them of the fear of depreciation of savings, and prevent an increase in current demand due to the steady rise in prices of goods and services.

Inflationary expectations can be prevented by:

− comprehensive strengthening of the market economy mechanism (liberalization of prices, suppression of monopolism, stimulation of production
and sales, encouraging small businesses, easing customs
restrictions, etc.);

− the existence of a government committed to the constant eradication of uncontrollable inflation and enjoying the confidence of the majority of the population;

− introducing strict limits on annual increases in the money supply. This indicator consists of the long-term growth rate of real production and the level of inflation that the government considers acceptable and undertakes to strictly control;

− reduction of the budget deficit with the prospect of its complete elimination. To solve it, you can go two ways - increase taxes or reduce government spending. The second way is preferable;

− minimizing the impact of external inflationary impulses on the national economy, especially the movement of speculative short-term loans (capital);

− use of currency appreciation. It causes a decrease in the prices of goods and services imported from abroad, therefore pushing down the general price level.

When the inflationary situation becomes intolerable, long-term measures alone will not suffice. It is necessary to realize the tactical potential of anti-inflationary regulation. Tactical methods do not eliminate the causes of inflation, but only reduce inflationary tension for a while. This may include the privatization of state-owned enterprises, preferential taxation in order to expand production, increasing the savings rate, etc.

Experience shows that it is almost impossible to stop inflation through organizational measures. Structural reform is needed to overcome imbalances in the economy.

1.2. Anti-inflationary policy of the state and its main directions

Violation of the proportion in the national economy can be gradually eliminated with the help of the structural policy of the state and even direct administrative methods, in particular the reduction of military expenditures, the rationalization of industrial capital investments, the transition from budgetary financing of part of industrial capital investments to the use of enterprise funds, the attraction share capital, fragile monopolistic structure of the economy, etc. All this must be supplemented with measures that limit the money supply, eliminate the state budget deficit, and stabilize the exchange rate of the national currency.

The evolution of the market worldview has shaped three directions of anti-inflationary policy: Keynesian, monetarist and structuralist.

Keynesianism. Kane believed that it was possible to raise the level of supply by creating effective demand, which should become an external activating force for entrepreneurs, providing large private firms with significant government orders. As a result, a multiplier effect is predicted, a large complex of enterprises is set in motion, the recession is reduced, and unemployment is reduced. Supply, spurred by orders and cheap credit, grows, which leads to a fall in prices and a decrease in inflation. A negative feature of Keynesian recipes is the deepening of the budget deficit, since government orders to private businesses are additional government expenses. At the same time, the state budget deficit should in no case be covered by additional emission of money, since this is the most destructive and instantly spreading form of inflation. Keynes proposed another way - to resort to government external borrowings, which are repaid later, after inflation is curbed. The disadvantage of this path is the growth of external debt. The methods proposed by Keynesianism can really only be effective in conditions of strong competitive forces.

Monetarism. Monetarists led by M. Friedman also drew attention to the fact that Keynes’s recipes do not allow the crisis to be fully implemented
its cleansing function is to free the economy from imbalances for a certain period of time and restore economic balance in the country. The country emerged from the crisis ahead of schedule, but retained the old imbalances, then new ones were superimposed on them, and the country was again on the verge of a crisis.

Monetarists focused on the anti-inflationary block associated with the growth of supply, which would not require additional investment. In their opinion, it is necessary to sell everything that is possible (resources, information, etc.) and carry out a decisive attack on monopolism in the economy, encouraging small and medium-sized businesses. If a country has a large public sector, reasonable privatization is possible and market liberalization is necessary. Demand, according to Friedman, can also be reduced by carrying out confiscatory monetary reform and/or freezing savings in order to reduce demand pressure in the consumer market. Reducing aggregate consumer demand is also possible by reducing the budget deficit, primarily through liberation from excessive social programs and supporting inefficient production with subsidies and subsidies. Monetarists propose introducing expensive credit, which becomes unavailable for inefficient production; the strongest producers enter the market, encouraged by a lower tax rate.

Monetary programs are implemented in three stages. At the first and second stages, levers are used that reduce aggregate demand, at the third - levers that stimulate the growth of the commodity mass.

Structuralism. The key element of this concept is the assertion that there is “inertial inflation” that is not associated with the expansion of the money supply. Such inertia is caused by the phenomena of long-term adaptation of the economy to high levels of inflation; in particular, the emergence of high inflation expectations among economic entities. They set in motion various adaptation mechanisms, which itself causes increased inflation and severe side effects, such as a sharp decline in production.

Within the framework of this concept, there was a certain integration of structuralist ideas proper with the concepts of the late Keynesians. First of all, this concerns the concept of cost inflation, i.e. a rise in prices caused not by the expansion of the money supply, but by a rise in costs largely independent of it. In addition, the possibility of an inflationary impact of the external market on the “open” economies of developing countries (“import of inflation”) was discovered. This led the structuralists to the idea of ​​the need for direct administrative restrictions on inflation. They created the appropriate tools (for example, “heterodox shock” - the simultaneous freezing of basic prices and incomes in order to bring down the level of inflation expectations, measures to combat cost-push inflation, etc.). In addition, according to structuralists, requirements to limit the budget deficit, credit issue, etc. are overly strict and can be significantly relaxed. However, in cases where there is a sharp weakening of control over the growth of the money supply, inflation becomes galloping.

2. Essay on the topic: “Features of anti-inflationary policy in Russia at the present stage. Methods of combating inflation in Russia."

The state's anti-inflationary policy is a set of government regulation instruments aimed at reducing inflation. In anti-inflationary policy, two approaches can be distinguished.

The first approach provides for an active budget policy—maneuvering government spending and taxes in order to influence effective demand. With inflationary, excess demand, the government limits its spending and increases taxes. As a result, demand is reduced and inflation rates are reduced. However, at the same time, production growth is also limited, which can lead to stagnation and even crisis phenomena in the economy, and to the expansion of unemployment. Fiscal policy is also being pursued to expand demand in times of recession. If demand is insufficient, government investment and other spending programs are implemented and taxes are reduced. Low taxes are established primarily in relation to recipients of average and low incomes, who usually immediately realize the benefits. Thus, the demand for consumer goods and services expands.

The second approach is recommended by neoclassical economists, who highlight monetary regulation, which indirectly and flexibly affects the economic situation. This type of regulation is carried out by a formally non-government-controlled Central Bank, which changes the amount of money in circulation and the interest rate, thus influencing the economy. In other words, these economists believe that the government should carry out deflationary measures to limit effective demand, since stimulating economic growth and artificially maintaining employment by reducing the natural rate of unemployment leads to a loss of control over inflation. The modern market economy is inflationary in nature, since it is impossible to eliminate all factors of inflation (budget deficit, monopolies, imbalances in the national economy, inflation expectations of the population and entrepreneurs, transfer of inflation through foreign economic channels, etc.) In this regard, it is obvious that completely eliminating inflation is unrealistic. Apparently, this is why many states set themselves the goal of making it moderate, controlled, and preventing its destructive scale.

Among the main causes of inflation are the following:

• Issue of money to cover state budget expenses. The policy of the Central Bank, which led to an increase in the money supply in the country: issuing loans to the government to cover government expenses; issuing loans to commercial banks, which are used to issue loans to their clients - legal entities and individuals.
• Excessive expenses for militarization in conditions of structural distortions in the economy.
• Excessive tax rates, which slows down investment processes in the economy.
• The emergence of “social inflation” in the economy, which is associated with the monopoly of trade unions seeking wage growth.
• “Imported inflation”, caused by the influx of foreign currency into the country, the low exchange rate of the national currency, which leads to an increase in prices for imported goods. The revaluation method (increasing the value of the national currency) can make imports cheaper. However, revaluation makes the export of domestic goods more expensive, reducing their competitiveness in the world market.

Expansion of the public sector, accompanied by an increase in wages to attract and reward civil servants and employees of state-owned enterprises, and not in connection with increased labor productivity. Financing military orders and the expansion of the military-industrial complex (MIC) also leads to rising prices. The military-industrial complex is in demand in the capital and labor markets, as well as in the market for consumer goods and services.
And its products are not the object of consumer and industrial demand. Therefore, money to pay for military orders increases the money supply, which is not supported by the commodity supply.
The economy of modern Russia really faced inflationary problems in the early 90s. during a period of economic transformation from a centrally planned to a market economy. Russia's ill-conceived economic reforms after the collapse of the Soviet Union began with dramatic price liberalization. The absence of an anti-inflation program and a focus primarily on monetarist methods of regulating economic processes led to galloping inflation (the peak of inflation occurred in 1992, when prices increased by an average of 2500% per year).

Rice. 1. Consumer price indices in 2008-2013.

Thanks to the well-thought-out anti-inflationary policy of the Russian Federation, certain positive results have now been achieved. The Central Bank expects inflation to slow down in the second half of 2013 and fall within the target range of 5-6%. If this happens, then consumer price growth this year could become a record low over the past twenty years. In Fig. Figure 1 shows a graph of consumer price indices for all goods and services in 2008-2013 (at the end of the period, as a percentage of December of the previous period). It shows the positive impact of anti-inflationary policies on the economy in recent years.

Current inflation rates will slow down not only in 2013, but also at the beginning of next year. Chairman of the Bank of Russia Elvira Nabiullina told reporters about this. “As the new harvest arrives and the downward dynamics of prices on the grain market continues and in the absence of negative external and internal shocks, the Central Bank expects inflation to slow down in the second half of 2013 and at the beginning of 2014,” the head of the Central Bank noted.

Risks, however, still remain. True, according to Nabiullina, their influence on the growth of consumer prices in the country continues to decline. This applies to demand, food prices, and imported inflation.

Continuing these strong trends could serve us well in the coming year. According to Deputy Chairman of the Bank of Russia Sergei Shvetsov, the department has “very ambitious inflation goals for the next year.” So, with a good harvest, as well as a favorable situation in the domestic and foreign markets over the next year and a half, Russia still has a good chance of favorable inflation rates in the next two years.

However, the first half of 2013 was not the most successful in terms of consumer price growth. “In June and early July, the annual rate of increase in consumer prices decreased, but remained above the target range and was estimated at 6.6% as of July 8, 2013. Core inflation in June amounted to 5.8%,” the Bank of Russia’s Department of External and Public Relations said in a statement.

The day before, Rosstat published its inflation calculations. According to the latest figures from the department, inflation in Russia has reached 4% since the beginning of the year. But so far prices in the country are growing at the same pace as last year.

The main reason for inflationary processes in Russia is not an excess of money supply, but the lack of real ways to transform funds entering the economy into the real sector - in the form of investments. Moreover, the fight against inflation by curbing the growth of the money supply leads to stagnation in the non-resource sectors of the economy, which, in turn, leads to an imbalance in the supply and demand of goods and services in relation to the money supply entering the consumer market from the resource sectors and the budget.

To reduce inflation, measures are being taken to stabilize food markets: reducing import duties and increasing export duties on a number of inflation-risk products; measures to stimulate competition; restrictions on price increases for a number of socially significant goods, etc.
A comprehensive program implemented by the Government of the Russian Federation, which includes two groups of measures, is aimed at reducing inflation in the medium term:

1) measures to stimulate the supply of goods and develop competition (especially in food and agricultural markets), develop trade infrastructure, create new market instruments to curb the growth of tariffs of natural monopolies in conditions of deregulation;

2) fiscal and monetary policy measures aimed at reducing the monetary component of inflation and stimulating savings of the population, and thereby limiting excess demand of the population.

Instruments used in the anti-inflationary policy of the Russian Federation:

1. Bank lending. In conditions of compressed liquidity, the first instrument used is the selective injection of money into the economy (providing a number of the largest banks (primarily state-owned - Sberbank, VTB, Gazprombank and a number of others) with working capital to pay off debts on short-term obligations to other financial institutions; providing financial assistance to large industrial, construction, mining companies; providing loans to large food retail players).

The need for such a step was explained by the high level of bank on-lending in the economy, close cooperation between production and the financial sector, as well as the working conditions of retail chains with suppliers (primarily food). Even a short-term lack of liquidity in these segments of the economy could lead to a wave of defaults and bankruptcies, disruption of money circulation in the economy and a complete disruption of the chain of supplying the population with essential goods. As positive factors of this instrument (in the short term), one can note the weakening of the liquidity deficit in the economy, the preservation of the current performance of important market participants - in the sphere of production, circulation and trade.
2. Reserve rate. The increase in the reserve rate by the Central Bank of the Russian Federation, according to official statements, is being done to increase ruble rates relative to foreign exchange rates. This measure should counteract the outflow of capital. Despite the fact that increasing the reserve rate implies strengthening the reliability of the banking sector, part of the liquidity is withdrawn from free circulation, which, given the shortage of money in the country, seems an absurd step. Assessment of the influence of the factor: negative in the short term, positive in the long term.

3. Inflation targeting policy. In order to improve the mechanism for implementing monetary policy and create conditions for introducing an inflation targeting regime, the Bank of Russia began carrying out operations for the planned purchase of foreign currency on the domestic market.
Thus, anti-inflationary policy is a permanent function of the state in a market economy. In terms of its importance, it is not inferior to any other state policy (for example, social or scientific and technical). The set of effective measures for anti-inflationary regulation of market economies in developed countries, developed and tested in practice, deserves careful study and requires skillful use in Russia.

3. Control test tasks

3.1. Proponents of the concept of “supply-side economics” believe that:

a) economic policy aimed at stimulating aggregate demand is ineffective;

b) economic policy aimed at stimulating aggregate demand is effective;

c) economic policies aimed at stimulating aggregate supply are ineffective;

D) economic policies aimed at stimulating aggregate supply are effective.

Rationale for answer: The essence of the concept is the transfer of efforts from managing demand to stimulating aggregate supply, activating production and employment. The main idea of ​​the authors of the concept is to stimulate the supply of capital and labor.

3.2. According to the Phillips curve, the government's anti-inflationary policy in the short term leads to:

a) to an increase in unemployment and a decrease in output;

b) to reduce unemployment and output;

c) to an increase in unemployment and output;

d) to a decrease in unemployment and an increase in output.

Rationale for answer: In the short run there is a choice between inflation and unemployment, the government can reduce inflation by increasing the unemployment rate or increase employment by accepting a higher inflation rate
.

Bibliography

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2. Veselova N.V. Macroeconomics (advanced level). Electronic educational manual. - Nizhny Novgorod: Nizhny Novgorod State University, 2012. - 135 p.
3. Manevich V. Tobin’s monetary dynamic model and analysis of the Russian economy // Questions of Economics. - 2009. - No. 3. - 108 p.
4. Inflation forecasts // CBR.RU: daily. online edition 2013. 10 Sep. URL: http://www.cbr.ru/pw.aspx=4633 (access date: 10/18/2013).
5. State development strategy for the period until 2015. Report prepared by the working group of the State Council of the Russian Federation under the leadership of V.I. Ishaeva: official. text. // Russian Economic Journal. - 2011. - No. 1. — 37 s.
6. Titova N.E. History of economic doctrines: Course of lectures. - Mn.: Academy of Management, 2012. - 280 p.
7. Economic theory. Macroeconomics. Transition economy: Textbook. At 2 o'clock / under general ed. B.I. Gerasimov and N.S. Kosova. —Tambov: TSTU Publishing House, 2011. — Part 2. — 204 p.
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Inflation is a complex socio-economic process that causes many consequences both in the economy and in the social sphere.

1. In conditions of inflation, real incomes of the population are reduced. Here it is necessary to consider two indicators - nominal and real income. Nominal income is the income actually received, and real income is the amount of goods and services that consumers can purchase within their nominal income. This means that, with a constant nominal income, as inflation processes develop, the volume of purchases will decrease due to rising prices, that is, real income will fall. Real income can be calculated as follows:

• 2. With inflation, real savings in the form of paper money decrease; in addition, the inflation rate is most often much higher than the interest rate in credit institutions. Thus, the personal savings of the population depreciate.
• 3. Social stratification occurs especially quickly. The majority of the population falls into poverty, crossing the poverty line.

• 4. Hidden confiscation by the state of funds from the population through progressive taxation. Taxation of basic household income is progressive in most countries, that is, the higher the income, the higher the income tax rate. In conditions of high inflation, the initial tax rates for the income of the rich segments of the population, which existed at the beginning of the year, are gradually beginning to extend to the incomes of the middle and even poor segments of society.
• 5. “Flight” from money is the accelerated materialization of funds of the population and business, that is, in conditions of depreciation of money, subjects of market relations try to get rid of them as quickly as possible, converting them into goods and services.
• 6. The lag of the interest rate paid by banks and other credit institutions from the inflation rate up to negative values ​​of the real interest rate. Here it is necessary to distinguish between the nominal and real interest rates. Nominal interest rate is the interest rate on loans that currently exists in a given country. Real interest rate = Nominal interest rate minus i, where i is the inflation rate.
• 7. Losses are usually borne by creditors, and debtors gain if the loan agreement does not provide for a change in the interest rate in accordance with changes in the price level in the economy. It becomes unprofitable to lend money, which leads to a crisis in the credit system.
• 8. It is practically impossible to obtain long-term loans; therefore, there are no investments in the economy.
• 9. Instability of the economic situation and economic information. In a market economy, prices provide the main information about the market situation. It is prices that producers and consumers focus on when deciding to sell or buy a particular product. If prices are subject to constant changes, producers become disoriented. Naturally, no one is opening new production facilities.

As a result, the system of regulation of the market economy is destroyed.

The existence of negative socio-economic manifestations of inflation forces the government to take countermeasures to reduce its level and minimize negative consequences. There are usually two main directions of the state’s anti-inflationary policy: adaptive policy, involving adaptation to inflation, mitigation of its consequences, and active policy, aimed at eliminating the causes of inflation. The essence of adaptive policy comes down to the fact that the government indexes the main types of income of the population (minimum wage, pensions, scholarships, etc.) with a certain periodicity. Typically, indexation is 60-70% of the inflation rate. This is done in order, on the one hand, to maintain a minimum sufficient level of income of the population, and, on the other hand, due to the difference of 30-40%, to gradually reduce demand in the national market over one and a half to two years and thereby extinguish inflation. This method of fighting inflation has both advantages and disadvantages. Its clear advantage is social stability in society; The disadvantage is the length of time it takes to implement this approach to combating inflationary phenomena. An active anti-inflation policy is carried out on the basis of a significant reduction in the amount of money in circulation. This implies:

• carrying out confiscation-type monetary reform;
• control over money issue;
• preventing emission financing of the state budget;
• implementation of current control over the state of the money supply as part of the implementation of monetary policy.

In addition to these measures, a number of other steps are being taken to combat demand inflation and supply inflation:

• increasing taxes and cutting government spending;
• reduction of the state budget deficit;
• stabilization of the exchange rate;
• restraining the growth of factor incomes (income of owners of production factors - payment for economic resources);
• fight against monopolism in the economy.

The implementation of an active anti-inflation policy makes it possible to reduce inflation to almost zero in a fairly short period of time. However, the implementation of the measures described above is accompanied by the massive ruin of uncompetitive and low-profit firms, leading to an increase in unemployment, giving rise to social tension in society.

In reality, the government most often pursues a policy that combines both directions of combating inflation with the predominance of one of them.

Control questions

• 1. What is meant by the economic cycle? What are the main phases of the business cycle?
• 2. Name and characterize the types of economic cycles.
• 3. What are the reasons for the cyclical development of the economy?
• 4. How do business cycles affect production and employment in different sectors of the economy? How does the acceleration principle affect cyclical development?
• 5. Why is unemployment an economic problem? How to measure its level? Why is it important to know the duration of unemployment?
• 6. How is the natural rate of unemployment determined? What is full employment, potential national output?
• 7. Describe the forms of unemployment. What is the difference between frictional, structural and cyclical unemployment?
• 8. What are the economic and social consequences of unemployment?
• 9. What is the essence of inflation? What are the main manifestations of inflation? What is the difference between open and suppressed inflation?
• 10. How to measure open inflation? What are the ways to assess the level of suppressed inflation?
• 11. Compare moderate, galloping inflation and hyperinflation.

Inflation causes many consequences, both in the economy and in the social sphere.

1. In conditions of inflation, real incomes of the population are reduced. Here it is necessary to introduce two concepts - nominal and real income. Nominal income is the income actually received, and real income is the amount of goods and services that consumers can purchase within their nominal income. This means that, with a constant nominal income, as inflation processes develop, the volume of purchases will decrease due to rising prices, i.e., real income will fall. Real income can be calculated as follows:

The change in real income can be roughly expressed by the following formula:

Where ? - inflation rate.

During inflation, people on fixed incomes suffer losses. These people, over time, find that they end up with money that has less purchasing power than before.

2. With inflation, real savings in the form of paper money decrease; in addition, the inflation rate is most often much higher than the nominal interest rate in credit institutions. Thus, the personal savings of the population depreciate.

3. Social stratification occurs especially quickly. The majority of the population falls into poverty, crossing the poverty line.

4. “Flight” from money - accelerated materialization of funds of the population and business. In conditions of depreciation of money, subjects of market relations try to get rid of them as quickly as possible, transferring money into goods and services. During a period of sustained inflation, people are forced to spend money now to prevent their savings and current income from depreciating. Enterprises do exactly the same thing - instead of investing capital in investment goods, producers, protecting themselves from inflation, acquire unproductive material assets (gold, precious metals, real estate).

5. The lag of the interest rate paid by banks and other credit institutions from the inflation rate up to negative values ​​of the real interest rate. Here it is necessary to distinguish between the nominal and real interest rates. Nominal interest rate- the interest rate on loans that currently exists in a given country. Real interest rate- nominal interest rate minus the inflation rate.

6. Losses are usually borne by creditors (lenders), and debtors (borrowers) gain, if the loan agreement does not provide for a change in the interest rate in accordance with changes in the price level in the economy. Due to inflation, the recipient of the loan is given “expensive” money, and he returns it with “cheap” money. It becomes unprofitable to lend money, which leads to a crisis in the credit system. It is practically impossible to obtain long-term loans; therefore, there are no investments in the economy.

7. During a period of open inflation, prices rise faster than nominal incomes. For entrepreneurs, wage costs grow slower than the cost of purchasing means of production, which makes it more profitable to maintain outdated and relatively cheap equipment than to replace it with new and more expensive ones. Due to the rapid growth of prices, the most labor-intensive technology can bring more profit than the new one. This circumstance negatively affects the technical state of production and slows down the development of new technologies.

8. Instability of the economic situation and economic information. In a market economy, the main information about the market situation is carried by the yen. It is foam that manufacturers and consumers focus on when deciding to sell or buy a particular product. If prices are subject to constant changes, producers find themselves disoriented: In an inflationary economy, prices no longer provide accurate signals to investors regarding the effectiveness of investments in a particular industry or area of ​​the economy. As a result, inevitable sectoral and regional imbalances arise. Since it is almost impossible to predict the movement of prices and costs, entrepreneurs prefer to refrain from large capital expenditures with long payback periods.

Uncontrolled inflation destroys the system of regulation of the market economy and makes the entire national economy poorly managed. By destabilizing the economy, inflation automatically reduces the effectiveness of market economic regulators, which pushes the state to use administrative methods of influence.

There are usually two main directions of the state’s anti-inflationary policy: adaptive policy, which involves adaptation to inflation, mitigation of its consequences, and active policy aimed at eliminating the causes of inflation. The essence of adaptive policy comes down to the fact that the government indexes the main types of fixed income of the population (minimum wage, pensions, scholarships, etc.) with a certain periodicity. Typically, indexation is 60-70% of the inflation rate. This is done in order, on the one hand, to maintain a minimum sufficient level of income of the population, and on the other hand, due to the difference of 30-40%, gradually, over one and a half to two years, reduce demand in the national market and thereby extinguish inflation. This method of fighting inflation has both advantages and disadvantages. Its obvious advantage is social stability in society. 6 As a disadvantage, we can mention the length of time for implementing this approach to combating inflationary phenomena. An active anti-inflation policy is carried out on the basis of a significant reduction in the amount of money in circulation. This involves carrying out a confiscation-type monetary reform; control over money issue; preventing emission financing of the state budget; current control over the state of the money supply as part of the implementation of monetary policy.

In addition to these measures, a number of other steps are being taken to combat demand-side inflation and supply-side inflation: increasing taxes and reducing government spending; reduction of the state budget deficit; stabilization of the exchange rate; restraining the growth of factor incomes (income of owners of production factors - payment for economic resources); fight against monopolism in the economy and other measures.

The implementation of an active anti-inflation policy makes it possible to reduce inflation to almost zero in a fairly short period of time. However, the implementation of the measures described above is accompanied by the massive ruin of uncompetitive and low-profit firms, leading to an increase in unemployment, generating social tension in society. In reality, the government most often pursues a policy that combines both directions of combating inflation with the predominance of one of them.