I NEED THIS WORK RE-WRITTEN TO REMOVE PLAGIARISM

Running Head: ECONOMICS 1

ECONOMICS 5

Economics

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Key Points

In the article entitled “Core inflation posts largest gain in 4-1/2 years”, the author, Reuters, writes on the trend of inflationary activities within the United States accounting for a period of four and a half years. From the article, one can come up with four key points. The first of these points is that costs related to services that offer basic human needs seem to be on the rise. Such services include medical costs and rents. This kind of services seems to be forming the most part of the four and a half inflationary period as stated by Reuters (2016). The second identified point is the fact that the author pointed out the possibilities of price pressures as a result of the rising costs in rent and medical costs. The pointing out of such an effect as temporal, however, calls for further analysis before such a conclusion is reached. One can also identify the hint on interest rates as the author states that it will rise in a gradual manner in the year 2016 due to the price pressures. Identified in a major way seems to be the consumer price index that the author has put a lot of emphasis throughout the article. Described in the article tends to be the trend of consumer price index within the United States and the views of various economist on the matter.

Supply as Applied to the Identified Points

One can look at the four points from the perspective of supply as an economic concept. To begin with, rent and medical costs seem to be rising as population increase rate is higher than the rate of increasing medical facilities and houses. In this case supply of these basic services tend to be low leading to their rising costs. With regard to the second identified, as a result of the low supply of part of the most basic needs by citizens within the United States, prices tend to escalate for almost every other product. These leads to the price pressures within the country's economy as stated by Reuters (2016). Hence, and regarding the third point, the low supplies that drive the escalated prices to go ahead to impact on financial institutions leading to a rise in interest rates. The low supplies may bring about unanticipated inflation. Thus, the CPI, in this case, comes in hand to measure this inflation that consumers tend to experience in their daily life expenses. The supply of a given item in relation to its demand determines its price. Thus, an item’s supply has an impact on the consumer market basket that heavily depends on the purchases made by the consumers. It is from this consumer market basket that the consumer price index becomes determined (Hellebrandt & Mauro, 2015).

Effect on U.S Economy

One of the sectors of the United States economy that seem to be changing and growing fast involves the country's trade with other nations. Over the last few decades, the amount of goods and services that the United States' government agencies, businesses, and consumers import seem to have increased dramatically. On the same note, the amount of goods and services from the United States that is exported to other nations has also increased tremendously (Lewis, 2015). Such international trade including the policies that restrict or encourage the export and import supply have a number of broad-ranging effects on the economy of the United States. Thus, inflation may kick in depending on the balance of the supply of these imports and exports. Where the country's starts importing and exporting goods and services as opposed to the usual ones then this leads to a rise in the price of these items due to the definitely increased excise duties and customs duties. More so in the case of imports, the country may not import enough supply for its citizens. This would, therefore, lead to an increase in the prices of goods and services, giving rise to price pressures that invite a rise in interest rates that could bring about inflation within the country (Lewis, 2015).

Conclusion and Rational

Yes, I agree with the economic article as written by Reuters (2016). My agreement with this article comes because there exist so much evidence of the rising living costs. The consumer market basket tends to comprise of so little for so much. Hence, as the author states, the hiked price of the most basic goods and services required by consumers leads to the price pressures that encourage the rise of interest rates by financial institutions.

Therefore, with such a trend and as per the views of the author or rather his speculation, inflation could indeed rise gradually in the next four and half years. Given the gradual depletion of oil mines within the universe, alternative ways of acquiring oil have to become embraced fully without much further delay as oil seems to be the driving force of the world’s economy. Without such actions being put into force, inflation could flourish within the four and a half years as speculated by Reuters.

References

Hellebrandt, T., & Mauro, P. (2015). The Future of Worldwide Income Distribution. Peterson Institute for International Economics Working Paper, (15-7).

Lewis, M. (2015). Forecasting with Macro-Finance Models: Applications to United States and New Zealand.

C. (2016, February 19). Core inflation posts largest gain in 4-1/2 years. Retrieved May 25, 2017, from http://www.cnbc.com/2016/02/19/us-consumer-price-index-jan-2016.html