Inflation and Deflation 3

Gap-fill exercise

Fill in all the gaps using the AWL words in the list, then press "Check" to check your answers. Use the "Hint" button to get a free letter if an answer is giving you trouble. Note that you will lose points if you ask for hints or clues!
   achieve      Advocates      analysts      apparent      availability      benefits      concentrate      consistent      consumption      contradictory      coordinating      create      creating      credit      cyclical      disincentives      distorting      dominance      economic      exceeded      expanded      expansion      federal      Federal      finance      financial      financing      fundamental      guidelines      incentives      initiatives      intervention      investment      labour      normal      offset      output      percentage      periods      plus      policies      policy      procedures      range      recovery      regulation      regulatory      require      required      requirement      requirements      restore      restoring      restraint      revenues      reversal      sources      Stabilisation      stabilisation      stability      stable      supplement      sustained      techniques      technology      voluntary      whereas      XXXX   
Measures
Any serious antiinflation effort will be difficult, risky, and prolonged because tends to reduce real and employment before become , fiscal and monetary stimulus typically increases activity before prices accelerate. This pattern of and political risks and explains the of .

efforts try to the effects of inflation and deflation by activity. To be effective, such must be rather than merely occasional fine-tuning actions that often exaggerate existing changes. The is of money and commensurate with real growth and market needs. Over extended the Reserve System can influence the and cost of money and by controlling the reserves that are and by other . Monetary during expansions reduces inflation pressures; an accommodative during recessions helps . Monetary officials, however, cannot unilaterally if private and cause inflation or deflation pressures or if other public are . Government spending and tax must be with monetary actions so as to and prevent exaggerated swings in .

Since the mid-1960s the rapid growth of budget spending even greater increases in off-budget outlays and a multitude of lending programs have the tax almost every year, large government deficit borrowing . Pressures to provide money and for private and and for the chronic budget deficits and government loan programs have led to a rapid of the money supply with resulting inflation problems. Effective efforts will a better balance and a more application of both monetary and fiscal .

Important supply-side actions are also to fight inflation and avoid the stagnation effects of deflation. Among the that have been recommended are the of the serious deterioration of national productivity by increasing for savings and ; enlarged spending for the development and application of ; improvement of management and efficiency through education and training; efforts to conserve valuable raw materials and develop new ; and reduction of unnecessary government .

Some have recommended the use of various income to fight inflation. Such from mandatory government for wages, prices, rents, and interest rates, through tax and , to simple standards suggested by the government. claim that government would basic monetary and fiscal actions, but critics point to the ineffectiveness of past control programs in the United States and other industrial nations and also question the desirability of increasing government control over private decisions. Future will likely on monetary and fiscal and increasing supply-side efforts to productivity and develop new .