Microeconomics

Article # 4

Summary - In current news we take a look at inflation and some of the forces that help to predict the outcome of whether or not the inflation rate is going to go up, or simply going to stay the same. The inflation process has changed dramatically in the last decade. Many plans of action have been taken in order to avoid an upward shift of this reality. The federal reserve has set up an unprecedented credibility in the financial markets as an inflation fighter. Also intense global competition limits the pricing power, despite rising production costs. Technology has slowed the growth rate of labor input costs incurred while producing a unit of output. And the information highway (internet) has also played its role in giving some pricing power to the people by enabling them to go right to the source for what they need rather than dealing with retailers. This new found system is very beneficial to the economy. Price stability gives companies more confidence and may make it easier for them to plan for the future.

Writer's Opinion - I feel that this is a good thing. But that is what makes me worry. How long can a good thing last. I have noticed a change in how some people go about making large purchases. They may bounce around from store to store (site to site) hoping to find what it is that they need on sale. Then even if it is on sale you might try to bargain with another vendor to see if they might like to make you a better offer than their competitor to acquire your business. This method has worked well for myself as well as for others. Lately it has been rather enjoyable to be able to get what I wanted for the price I was looking to spend, or even less than that. I hope that this system can hold up. I think that the economy will greatly benefit from this in the future.