price controls and money

In this essay  there is going to be  three topics: two are about money. While the one is about price controls; you would likely hear this one talked about once in awhile on the news and/or internet. The first question is: What problems  do price controls cause, and what are  the benefits of letting prices adjust without government inference?  when the law forces the prices down  it causes problems. One of the problems it causes, is more demand on products that are in shortage mode. Another is, it causes most of the sellers to stop selling the product/products  due to very low  price during a shortage. The  benefits are that  when the prices goes low  when the demand is low  plus there is no shortage. Yet, prices goes high up  when  the demand  is  high while there a shortage of the product or products . In addition, sellers continue to  sell the product/products due to earn money(enough money to fullfill their needs and enough to continue selling the product or products)  and they they have more freedom.  The second question is: What is the origion of money?(In other words ,how did  money first arise?) Money began at the time of bartering where people would trade goods  for goods for a time. Soon, there was  problems in bartering so, they would trade their goods for gold to get the things they wanted.  Then, everyone moved from bartering to gold coins. Afterwards, prices come around after they were use to gold coins but after  a whilegold coins got hard and heavy to carry around everywhere So as a replcement og gold coins , paper dollars came from the government to the people .They had to spend time to get use to  the new form of money before having their gold coins taken  away.In addition, once they were use to the paper money; they  were able to set prices just like how they did for  the gold coins. The third question is:Name and explain three disadvantages that have been identified with fiat money.The first one is high prices  cause by lots of fiat money  which makes the people who waits until the end of the month  to pay more than those who  paid less at the beginning of the month. The second one is pushing down interest rates artifically with fiat money. Which makes confusion between businesses and the people. In addition, it causes  business firms to fall and  the people to fall into a depression. The third one, is  that   it causes  power for the government  to create  money out of thin air .Furthermore, fiat money  loses it value as more is printed.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s