The effect of public expenditure on inflation in developing countries
Order ID |
53563633773 |
Type |
Essay |
Writer Level |
Masters |
Style |
APA |
Sources/References |
4 |
Perfect Number of Pages to Order |
5-10 Pages |
Description/Paper Instructions
The effect of public expenditure on inflation in developing countries
Public expenditure is one of the most important components of the government’s fiscal policy. It is used to finance various activities such as infrastructure development, social welfare, education, healthcare, defense, and many others. However, excessive public expenditure can lead to inflation, which can have negative consequences for the economy, especially in developing countries. This essay will discuss the effect of public expenditure on inflation in developing countries.
Inflation is defined as a sustained increase in the general price level of goods and services in an economy over a period of time. It is usually measured by the consumer price index (CPI), which tracks the prices of a basket of goods and services consumed by households. Inflation can be caused by various factors, including the increase in the money supply, rise in the cost of production, and demand-pull inflation. However, public expenditure can also contribute to inflation, especially in developing countries.
One of the main channels through which public expenditure affects inflation is the increase in aggregate demand. Public expenditure, especially on infrastructure development, can increase the level of economic activity and create employment opportunities. This can increase the disposable income of households, which in turn can lead to an increase in consumption expenditure. As demand for goods and services increases, producers may increase prices to maximize profits. This can lead to an increase in the general price level, which is inflationary.
Another way public expenditure can cause inflation is through the financing of expenditure. In developing countries, governments often finance public expenditure through borrowing, either from domestic or foreign sources. This can increase the money supply in the economy, which can lead to an increase in aggregate demand. If the increase in demand is not matched by a corresponding increase in supply, prices can increase, leading to inflation. Moreover, borrowing from foreign sources can lead to exchange rate fluctuations, which can also contribute to inflation.
In addition, public expenditure can also lead to inflation through its impact on production costs. For example, if the government increases its expenditure on infrastructure development, the cost of construction materials and labor may increase. This can increase the cost of production for firms that use these materials and labor, leading to an increase in the prices of their goods and services. This can then lead to an increase in the general price level, which is inflationary.
However, it is important to note that public expenditure can also have a positive impact on inflation in developing countries. For example, if public expenditure is directed towards improving productivity, such as investment in education and training, it can lead to an increase in the supply of goods and services. This can lead to a reduction in the cost of production, which can lead to a decrease in the general price level, reducing inflation.
Moreover, public expenditure can also be used to target inflation directly. For example, the government can increase its expenditure on price stabilization programs, such as food subsidies or buffer stock operations, to control the prices of essential commodities. This can help to reduce the general price level, reducing inflation.
In conclusion, public expenditure can have both positive and negative effects on inflation in developing countries. Excessive public expenditure can lead to an increase in aggregate demand, financing costs, and production costs, leading to inflation. However, if public expenditure is targeted towards improving productivity or controlling prices, it can help to reduce inflation. Therefore, it is important for policymakers to carefully manage public expenditure to avoid inflationary pressures and promote economic growth and stability.
The effect of public expenditure on inflation in developing countries
RUBRIC
QUALITY OF RESPONSE |
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POOR / UNSATISFACTORY |
SATISFACTORY |
GOOD |
EXCELLENT |
Content (worth a maximum of 50% of the total points) |
Zero points: Student failed to submit the final paper. |
20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. |
30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. |
40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. |
50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. |
Use of Sources (worth a maximum of 20% of the total points). |
Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. |
5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. |
10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. |
15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. |
20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. |
Grammar (worth maximum of 20% of total points) |
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10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors |
15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. |
20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. |
Structure of the Paper (worth 10% of total points) |
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3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. |
5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper |
7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. |
10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper. |
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