Answer To: LENGTH : 6 Pages, Font 12 in Times New Roman QUESTION: Critically discuss the relevance and...
Komalavalli answered on Sep 10 2022
Most policymakers' primary objective is to achieve high and sustainable economic growth while maintaining low and stable inflation. However, recent research on the link between inflation and economic growth has shown the topic's complexities. According to these researches, there might be no association, a negative relationship, or a positive relationship between inflation and economic growth. Other research indicate that these characteristics may be associated in the short run, long run, or both, but there is no consensus on the direction of causality. As a result, the relationship's ambiguity theoretical and empirical investigations on the relationship between inflation and economic growth deserve more examination in the context of Zambia It is further away. The fact that no researches have been conducted to determine the exact link between two factors in the context of Zambia throughout the study during the preceding years. As a result, the relationship's ambiguity theoretical and empirical investigations on the relationship between inflation and economic growth deserve more examination in the context of Zambia It is further away. The fact that no research have been conducted to determine the exact link between these two factors in the context of Zambia throughout the study period and the preceding years.
One of the most important macroeconomic questions now being contested is the link between economic growth and inflation. One of the macroeconomic issues that every government attempts to achieve is the maintenance of a stable domestic economy.
This goal is followed in order to reduce the expenses associated with inflation as well as additional uncertainties in the case of price volatility. Economic development, on the other hand, is every society's aspiration, and economic growth is the cornerstone for economic development. As a result, macroeconomic policymakers should priorities strong and sustainable economic growth with stable inflation.
The debate between inflation and production dates back to classical theory economists and has evolved through several schools of thought. Following in the footsteps of Keynes, postwar economies were defined by Keynesian policies that expanded aggregate demand, hence increasing both inflation and production. This is especially addressed by Keynes' theory of demand-driven inflation, which holds that inflation and manufacturing have a positive connection in the near run. However, when the economy is at full employment, this link no longer holds since any rise in aggregate demand does not result in a change in output, but rather in an increase in price.
The Phillips curve technique provides another key viewpoint that confirms the presence of a positive link between inflation and economic growth. This theory implies that high inflation leads to low unemployment, which indicates that employment will expand, which will boost GDP.
Historical overview of Zambian inflation and economic development:
Zambian policymaking followed the socialist road both immediately after independence and more than a decade later. The government has a significant role to play in economic matters. During this time, the price of copper rose and huge profits were made; as a result, the mining sector benefitted from higher money...