Wednesday, July 16, 2008

Inflation, Living Stantard, market failure and solutions

Economics
When you work, you get payments, and the boss get services from you which value will be at least as much as the wage. So everyone get something form the voluntary exchange. When the market is efficient, we use our resources where they are valued most. When the market is not effective, it will usually adjust itself or the government will give orders to change the economy. Government force is required when market failure happens. Market failure arises when a company control the market and limit the goods produced in order to bring in a great profit.
Market failure also arises when nobody wants to pay for public utilities, such as road. Then government collects tax to build the road.

It is important for each of us to work hard in order to increase the productivity of the country. This will only improves our living standards and brings welfare to the world.

It is not right to say the more money we have, the better the life standard is. If only prices rise, we will face inflation. Only productivity increases, living standards can improve!!