Comments on: Enter the age of inflation… http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/ for students and teachers of AP and IB Economics Sat, 22 Nov 2008 13:23:42 +0000 http://wordpress.org/?v=2.6.3 By: Jennifer Choi http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4841 Jennifer Choi Sun, 13 Apr 2008 22:34:58 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4841 I also think that it is the cost-push inflation is the main cause of inflation through out the world, mostly becuase of rising input costs including rising oil prices and labor costs (wages). Rising wages in China means that input costs and thus the product price in general is rising in China. If that's true, the burden of inflation will be on consumers and on other countries that are trying to utilize China's cheap labor. If China's output price continues to grow other nations would have to find another nations that provides with relatively cheaper cost of production, just like as it is stated in the article when Japan and Korea could no longer find 'cheap' labor in HK and Malaysia they moved to China and Vietnam. I, too, don't think we are in danger of running out of 'cheap' labor, which is our critical resource, becuase i think it is all the matter of relative expensiveness. Even if China or Vietnam's wages for laborers continue to increase, it would be still cheaper to produce in these nations than in the US, where the labor costs are much higher. So I think we will still utilize relatively cheaper resources. I also think that it is the cost-push inflation is the main cause of inflation through out the world, mostly becuase of rising input costs including rising oil prices and labor costs (wages).

Rising wages in China means that input costs and thus the product price in general is rising in China. If that’s true, the burden of inflation will be on consumers and on other countries that are trying to utilize China’s cheap labor. If China’s output price continues to grow other nations would have to find another nations that provides with relatively cheaper cost of production, just like as it is stated in the article when Japan and Korea could no longer find ‘cheap’ labor in HK and Malaysia they moved to China and Vietnam.

I, too, don’t think we are in danger of running out of ‘cheap’ labor, which is our critical resource, becuase i think it is all the matter of relative expensiveness. Even if China or Vietnam’s wages for laborers continue to increase, it would be still cheaper to produce in these nations than in the US, where the labor costs are much higher. So I think we will still utilize relatively cheaper resources.

]]> By: Howard Jing http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4832 Howard Jing Sun, 13 Apr 2008 16:23:18 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4832 1. I think that cost-push inflation is the primary source of inflation in developed countries because of rising oil prices. However, in developing nations such as China, I think that the primary soruce of inflation is demand-pull inflation due to a rising standard of living for some sections of the population. 2. Rising wages in China means that manual labor becomes relatively cheaper in lesser developed nations such as Latin America and Africa. Foreign investors would naturally become drawn to these cheaper sources of production, and the economy will start to increase in these countries. 3. I don't think that we are in danger of running out of critical resources in the near future (after all, Dakota has a ridiculous amount of shale oil, and Canada has a bunch of tar sand). Although resource scarcity and global warming are definitely issues that need to be dealt with, I think that we have enough resources to be able to develop new technologies to help tide us over. I think that we can eventually depend on entirely on renewable resources, and we can always try colonizing other planets if something really catastrophic occurs. 1. I think that cost-push inflation is the primary source of inflation in developed countries because of rising oil prices. However, in developing nations such as China, I think that the primary soruce of inflation is demand-pull inflation due to a rising standard of living for some sections of the population.

2. Rising wages in China means that manual labor becomes relatively cheaper in lesser developed nations such as Latin America and Africa. Foreign investors would naturally become drawn to these cheaper sources of production, and the economy will start to increase in these countries.

3. I don’t think that we are in danger of running out of critical resources in the near future (after all, Dakota has a ridiculous amount of shale oil, and Canada has a bunch of tar sand). Although resource scarcity and global warming are definitely issues that need to be dealt with, I think that we have enough resources to be able to develop new technologies to help tide us over. I think that we can eventually depend on entirely on renewable resources, and we can always try colonizing other planets if something really catastrophic occurs.

]]> By: Michael Daily http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4823 Michael Daily Sun, 13 Apr 2008 10:34:16 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4823 1. Cost-push inflation seems to be the primary inflation today because of both dwindling resources and increases in the costs of production. Inflation, which can occur because of these increases in the costs of production, ends up initiating increases in the price level. In the AD-AS model demand for goods and services is increasing shifting the AD curve right but the increases in the cost of production drives the AS curve left. The result is higher prices. This is evident in China with pork because the increase in production costs has caused the massive resulting inflation in pork prices. 2. Rising wages in China may cause less developed countries to receive a greater deal of focus as they would offer cheaper labor and resources. This would help the economies of the less developed nations by decreasing their unemployment, while at the same time help their own economy by reducing production costs. 3. Scarcity of resources is of course a concern for world economies, and new technology is the best solution. Obviously, new technology does not just rise out of thin air and takes time to develop, but since resources are dwindling it is our best chance to prolong resources if we are able to use them more efficiently. Resources although seemingly infinite are limited. Therefore, to avoid a period of no growth and contraction we need to learn to allocate resources more efficiently and effectively, such as learning to find alternate ways to produce energy than the use of fossil fuels. 1. Cost-push inflation seems to be the primary inflation today because of both dwindling resources and increases in the costs of production. Inflation, which can occur because of these increases in the costs of production, ends up initiating increases in the price level. In the AD-AS model demand for goods and services is increasing shifting the AD curve right but the increases in the cost of production drives the AS curve left. The result is higher prices. This is evident in China with pork because the increase in production costs has caused the massive resulting inflation in pork prices.

2. Rising wages in China may cause less developed countries to receive a greater deal of focus as they would offer cheaper labor and resources. This would help the economies of the less developed nations by decreasing their unemployment, while at the same time help their own economy by reducing production costs.

3. Scarcity of resources is of course a concern for world economies, and new technology is the best solution. Obviously, new technology does not just rise out of thin air and takes time to develop, but since resources are dwindling it is our best chance to prolong resources if we are able to use them more efficiently. Resources although seemingly infinite are limited. Therefore, to avoid a period of no growth and contraction we need to learn to allocate resources more efficiently and effectively, such as learning to find alternate ways to produce energy than the use of fossil fuels.

]]> By: Hansen http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4821 Hansen Sun, 13 Apr 2008 08:37:01 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4821 The increase in labor wages is an increase in input cost. As a recent NYTimes article said, the free ride that the US economy has had on China's cheap labor is coming to an end shortly. The implications with this are that Latin America and Africa get a new comparative advantage. Their labor is still cheap compared to the rising prices of China. As for running out of resources, between the push for renewable resources and new technologies which allows us to do more with less, I feel the economy may slow during the transition period between old and new, but will keep growing. The increase in labor wages is an increase in input cost. As a recent NYTimes article said, the free ride that the US economy has had on China’s cheap labor is coming to an end shortly. The implications with this are that Latin America and Africa get a new comparative advantage. Their labor is still cheap compared to the rising prices of China.

As for running out of resources, between the push for renewable resources and new technologies which allows us to do more with less, I feel the economy may slow during the transition period between old and new, but will keep growing.

]]> By: serenatu http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4816 serenatu Sun, 13 Apr 2008 07:42:26 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4816 1. I agree with everyone else that the inflation is a cost-push inflation. The supply curve shifts inward due to the price increases in resources. Thus less production will cause the price of the product to go up. 2. As the labor wages are increasing, and prices for some other resources are increasing also, many of the manufacturing company will start to find other place to locate their factories, such as Vietnam, as they have cheap labors, and lower costs for production. As more foreign investments start to settle in less developed countries, their AD curve will shift to the right, and reduces the unemployment rate. 3. I agree with some people that we will definitely run out of resources some day, but I also agree with people saying that with the new technologies, we will discover new resources, so as a result, the economy will keep growing. 1. I agree with everyone else that the inflation is a cost-push inflation. The supply curve shifts inward due to the price increases in resources. Thus less production will cause the price of the product to go up.
2. As the labor wages are increasing, and prices for some other resources are increasing also, many of the manufacturing company will start to find other place to locate their factories, such as Vietnam, as they have cheap labors, and lower costs for production. As more foreign investments start to settle in less developed countries, their AD curve will shift to the right, and reduces the unemployment rate.
3. I agree with some people that we will definitely run out of resources some day, but I also agree with people saying that with the new technologies, we will discover new resources, so as a result, the economy will keep growing.

]]> By: Alex Goldman http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4811 Alex Goldman Sun, 13 Apr 2008 04:32:58 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4811 1. Cost-push inflation seems a reasonable answer, since our resources are being rapidly exhausted causing an increase in production costs. This increases inflation, and as a result workers demand higher wages. An of this example might be China, where prices of many everyday household (oil and pork come to mind) have been increasing at a frightening rate. 2. Less developed countries might experience a great deal of foreign investment. A less developed country which has cheap labor, resources, and products invite foreign importing. As a result of the net export effect, the AD for these countries shifts out and decreases unemployment. 3. The issue of resource exhaustion can be solved primarily by the development of new technology. For example, using solar and wind power can replace fossil fuels as energy. To avoid a period of stagnation or contraction, resources need to be allocated more efficiently and recycled. The finite supply of resources will eventually be used up. 1. Cost-push inflation seems a reasonable answer, since our resources are being rapidly exhausted causing an increase in production costs. This increases inflation, and as a result workers demand higher wages. An of this example might be China, where prices of many everyday household (oil and pork come to mind) have been increasing at a frightening rate.

2. Less developed countries might experience a great deal of foreign investment. A less developed country which has cheap labor, resources, and products invite foreign importing. As a result of the net export effect, the AD for these countries shifts out and decreases unemployment.

3. The issue of resource exhaustion can be solved primarily by the development of new technology. For example, using solar and wind power can replace fossil fuels as energy. To avoid a period of stagnation or contraction, resources need to be allocated more efficiently and recycled. The finite supply of resources will eventually be used up.

]]> By: Cassy Chang http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4808 Cassy Chang Sun, 13 Apr 2008 01:18:42 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4808 1. I think it's cost push since production costs (including natural resources and wages for labors) increase, shifting the supply curve leftward. 2. Other developing countries will have a chance to improve unemployment rates. 3. techonological advances will keep economy growing. 1. I think it’s cost push since production costs (including natural resources and wages for labors) increase, shifting the supply curve leftward.
2. Other developing countries will have a chance to improve unemployment rates.
3. techonological advances will keep economy growing.

]]> By: kevinma http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4799 kevinma Sat, 12 Apr 2008 12:52:16 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4799 I agree with the people that think inflation today is cost-push. Because resource prices are rising, it causes the AS to shift in which creates less output and price level decreases. Because wages in China are rising, it is more costly to produce their goods in China. So as the cost per unit begins to rise, the business will start to make less money which will make them want to move to another country where they pay the workers less money to produce their product. Even though they want to do so, not all poor/developing countries are able to keep maintenance of the factories. some of the underdeveloped countries may not have the things they need to run a factory. I think anything can happen. There will always be something new. However, i think there will always be a new peak followed by contraction. Like someone said earlier, the business cycle shows that economies will sometime have to go into recession. I agree with the people that think inflation today is cost-push. Because resource prices are rising, it causes the AS to shift in which creates less output and price level decreases.

Because wages in China are rising, it is more costly to produce their goods in China. So as the cost per unit begins to rise, the business will start to make less money which will make them want to move to another country where they pay the workers less money to produce their product. Even though they want to do so, not all poor/developing countries are able to keep maintenance of the factories. some of the underdeveloped countries may not have the things they need to run a factory.

I think anything can happen. There will always be something new. However, i think there will always be a new peak followed by contraction. Like someone said earlier, the business cycle shows that economies will sometime have to go into recession.

]]> By: kevinhuang http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4793 kevinhuang Sat, 12 Apr 2008 08:21:07 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4793 1. I think that the inflation is primarily caused by demand-pull inflation because of the transition of many 3rd world countries into the world of economics. Jess Ng talks about many cases of stagflation but i think there are more cases of inflation accompanied by an increase in real GDP, which would include countries like China, Vietnam, Cambodia, and many other developing countries that are facing inflation as foreign investment inundates them; therefore, this would a be a case where demand has shifted to the right and as a result there are higher prices and increased GDP. 2. Foreign investment will turn towards those less developed countries and as a result they will enjoy the benefits of economic growth. 3. Perhaps, but there is still hope as many countries are developing more efficient ways of harvesting resources and energy while also finding ways to continuously renew resources and energy. 1. I think that the inflation is primarily caused by demand-pull inflation because of the transition of many 3rd world countries into the world of economics. Jess Ng talks about many cases of stagflation but i think there are more cases of inflation accompanied by an increase in real GDP, which would include countries like China, Vietnam, Cambodia, and many other developing countries that are facing inflation as foreign investment inundates them; therefore, this would a be a case where demand has shifted to the right and as a result there are higher prices and increased GDP.
2. Foreign investment will turn towards those less developed countries and as a result they will enjoy the benefits of economic growth.
3. Perhaps, but there is still hope as many countries are developing more efficient ways of harvesting resources and energy while also finding ways to continuously renew resources and energy.

]]> By: Jo Lo http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4789 Jo Lo Sat, 12 Apr 2008 07:44:02 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4789 Global inflation today is primarily due to cost-push. Prices worldwide are increasing, and the most profound being the skyrocketing of the price of oil. It is now much over $100 a barrel and economists predict it will go even higher. The rise in prices and wages in China will probably shift production to countries in Africa and Latin America. There are doubts that these countries do not have the necessary means to reach out to foreigners and do business, but China was probably in the same position before the wave of businesses went into the country. If China was able to do it, the African and Latin American countries should be able also, albeit not to the degree in China. I think countries will be able to continue to grow. New technologies are always giving us 'more' resources (making less resources needed to do something). But the biggest area where countries will be able to get profits is the environmental sector. More and more people today are realizing the effects of climate change and will thus demand more environmentally friendly solutions. New jobs will arise and replace those currently in the oil businesses. Global inflation today is primarily due to cost-push. Prices worldwide are increasing, and the most profound being the skyrocketing of the price of oil. It is now much over $100 a barrel and economists predict it will go even higher.
The rise in prices and wages in China will probably shift production to countries in Africa and Latin America. There are doubts that these countries do not have the necessary means to reach out to foreigners and do business, but China was probably in the same position before the wave of businesses went into the country. If China was able to do it, the African and Latin American countries should be able also, albeit not to the degree in China.
I think countries will be able to continue to grow. New technologies are always giving us ‘more’ resources (making less resources needed to do something). But the biggest area where countries will be able to get profits is the environmental sector. More and more people today are realizing the effects of climate change and will thus demand more environmentally friendly solutions. New jobs will arise and replace those currently in the oil businesses.

]]> By: andyxu http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4786 andyxu Sat, 12 Apr 2008 04:58:02 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4786 Of course, the current rapid increase in price level is a result of both demand-pull and cost-push direction, mostly the latter. In graphical terms, the AS curve is shifting leftwards due to higher per-unit production costs brought by the increased price of energy. The AD curve is shifting rightwards due a greater demand of an expanding population in China. What should China do? Shift the AS curve outwards, that is, increase the quality and quantity of human and natural resources through better education, training and health care of the growing workforce and improving the utilization rates of raw materials. Of course, the current rapid increase in price level is a result of both demand-pull and cost-push direction, mostly the latter. In graphical terms, the AS curve is shifting leftwards due to higher per-unit production costs brought by the increased price of energy. The AD curve is shifting rightwards due a greater demand of an expanding population in China.

What should China do? Shift the AS curve outwards, that is, increase the quality and quantity of human and natural resources through better education, training and health care of the growing workforce and improving the utilization rates of raw materials.

]]> By: Nicole Wong http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4762 Nicole Wong Thu, 10 Apr 2008 13:43:36 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4762 Global inflation today is mostly cost-push. This is seen when the wages issues in Hong Kong and Malaysia. As resource costs increase, aggregate supply decreases and price level increases, meaning inflation. Once workers realize their real wages have decreased, they demand higher wages. As wages begin rising in China, this predicts a rise in wages in other less developed countries as well, who may begin to follow China's example. Economies cannot continue to grow forever. At some point, resources could either run out or their prices could skyrocket. The business cycle shows that every expansion has an inevitable recession as an economy that grows extensively is very liable to rapid inflation, which could be the downfall for the economy. Global inflation today is mostly cost-push. This is seen when the wages issues in Hong Kong and Malaysia. As resource costs increase, aggregate supply decreases and price level increases, meaning inflation. Once workers realize their real wages have decreased, they demand higher wages.
As wages begin rising in China, this predicts a rise in wages in other less developed countries as well, who may begin to follow China’s example.
Economies cannot continue to grow forever. At some point, resources could either run out or their prices could skyrocket. The business cycle shows that every expansion has an inevitable recession as an economy that grows extensively is very liable to rapid inflation, which could be the downfall for the economy.

]]> By: judychen http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4755 judychen Thu, 10 Apr 2008 12:43:21 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4755 I think global inflation today primarily is cost-push inflation. As we know, oil is used almost in every production now. Plus, the oil for cars as well. Therefore, prices have gone up really high, so there's inflation. Rising wages in China gives firms less incentives to have a factory in China, since firms tend to maximize profits. So firms would start seeking places with cheap labor just like what China used to be. So less developed countries such as Africa and Latin America definitely need more development to improve their living standard. Therefore, even firms only pay a low wage, people in those poor countries would still be willing to work for them. I think as we are reaching a point of global inflation, people would not just let it keep happening, so I think there is still a chance for increase in improductivity or maybe finding more undiscovered resources. I think global inflation today primarily is cost-push inflation. As we know, oil is used almost in every production now. Plus, the oil for cars as well. Therefore, prices have gone up really high, so there’s inflation.

Rising wages in China gives firms less incentives to have a factory in China, since firms tend to maximize profits. So firms would start seeking places with cheap labor just like what China used to be. So less developed countries such as Africa and Latin America definitely need more development to improve their living standard. Therefore, even firms only pay a low wage, people in those poor countries would still be willing to work for them.

I think as we are reaching a point of global inflation, people would not just let it keep happening, so I think there is still a chance for increase in improductivity or maybe finding more undiscovered resources.

]]> By: Charlie.Gao http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4753 Charlie.Gao Thu, 10 Apr 2008 12:23:47 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4753 On the contrary to everyone's comments except for Ng and some others, I'd say that inflation is mostly caused by a shift in AS. That's why it's so hard to fix the inflation nowadays. If it were caused by AD, monetary and fiscal policy could be imposed to fix it. On the contrary to everyone’s comments except for Ng and some others, I’d say that inflation is mostly caused by a shift in AS. That’s why it’s so hard to fix the inflation nowadays. If it were caused by AD, monetary and fiscal policy could be imposed to fix it.

]]> By: howard lin http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4748 howard lin Thu, 10 Apr 2008 11:55:25 +0000 http://welkerswikinomics.com/blog/2008/04/09/enter-the-age-of-inflation/#comment-4748 Rising Wages in China implies that the few less developed countries would soon be crowded with companies that wants to build factories since the price for labor is rising rapidly. Considering the fact that wage is an input cost for producers. Rising Wages in China implies that the few less developed countries would soon be crowded with companies that wants to build factories since the price for labor is rising rapidly. Considering the fact that wage is an input cost for producers.

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