Theories of recession( depression) and inflation.

Reading Header : Theories of Recession (Depression ) and Inflation (Stagflation

Recession and Inflation

Your Institution

Your name

Course name

Instructor

Introduction

Sky-rocketing fuel prices have sent the global economy on turmoil . This is due to the worlds over-reliant on oil as the only form of growth and development . The rise in oil prices is then translated into further price hikes on other commodities . In United States , stagflation recession and inflation are hovering over the country along with the sky high oil prices (Recession Watch , 2008 . According to Marx theorists

br inflation is caused by the government issuing of excess money instead of concentrating on rewarding or encouraging the growth of labor . Schumpeter and Wicksel by the same vein argued that there were other uses of money and government should not exceed real money supply by issuing writs not backed by money which inevitably exacerbate inflationary trends . Government tends to finance budgets using ` money . Inflation is therefore caused by the government dealing with budget deficits . Inflation in the United States has occurred mostly in wartime , when the government ran a budget deficit (Meltzer , 2001 . As noted by Schumpeter recession compels capitalists to develop their firm and to come up with new technologies in to survive which consequently are the key means to overcoming recession . Despite low or worse still , negative growth rates , recession periods by this means contribute to the economic system 's long-run growth . More specifically industrial development can not be achieved without crisis (Meltzer 2001

Economists initially referred...