Saturday, August 22, 2009

Economic Growth and Price Stability

There is a conflict between the goals of economic growth and price stability. The rise in prices is inherent in the growth prices. The demand for goods and services rises as a result of stepping up of investments on a large scale and consequent rise in prices especially when the level of full employment is reached. In the long run when new resources are developed and growth leads tot eh production of more commodities, the inflationary rise in prices will be checked. But the rise in prices will be there with the growth of the economy and it will be moderate and gradual.

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