How would a government control food price inflation?
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I'm an Economics Student..and everyday I'm reading in the news and listening to the public complaining about food price inflation (this is in India mind you). I know that it occurs due to demand exceeding supply, and the equilibrium is shifted higher (shortage; prince increase) ..but the media, opposition party and public is constantly attacking the government in power because they are struggling to control it. So I was thinking how they could possibly control it..and I really can't think of a solution..any suggestions?
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Answer:
Are you talking about short term measures to deal with the problem? You would need to control the money supply in the economy, start by strengthening your domestic currency to make imports cheaper and exports costlier. Fruits and vegetables imported into the country will thus be buffered against inflation. The government could ban food exports so that there is enough domestic supply to feed the households and keep prices under check. But each of these suggestions has its drawbacks. I am sure you know that, bookworm!
Wilderne... at Yahoo! Answers Visit the source
Other answers
By Legalizing gay marriages, Wondering how it works? That would make lesser the number of normal marriages which would lessen the population growth making the demands and supply needs equal....LMAO
The Italian Stallion
Price controls are nothing new and they fail every time they're tried. The government could force food producers to sell their products for set prices. This would create even more shortages and result in more starving people. This is the law of unintended consequences and it bites governments in the a** every time but they refuse to learn from it. Nixon tried price controls in the 70's here and when they were finally repealed, prices stabilized and supply increased--it happens every time.
Franky D
A good question! The need is for lower prices and since these prices are due to the costs of the product, there is a need to reduce the cost of using one or all of the 3 factors of production. In particular land cost is too high and it can be reduced by shifting the tax on incomes onto land values. This will encourage land to be properly used and more of it to be made available.
Macrocompassion
A welfare system is usually put into place with a fair system of checks and balances to make sure that only the needy and not the greedy are using the system.
Lawrence E
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