Question

Do you think that we should aim for inflation or deflation in our economy?

How does technology and IT affect supply and demand?

Will better IT change market equilibrium?

Why do some communist countries still survive?

Answer 1

a) We should aim for inflation in our economy. Inflation is nothing but a general increase in the demand. If manage well this increased demand in the economy will encourage the firms to invest more and that will increase the investment and employment. Deflation means lack of demand and fall in the economy.

b) A change in the technology increases the supply of the good and shift the supply curve to the right. The new equilibrium will be at lower price and higher quantity output. When the price decreases the demand will also increases in the market.

c) Yes, a better IT will shift the supply curve to the right and increase the quantity. It will increase the output in the economy and have an equilibrium at a lower price.

d) Some communist countries survived because they changed some of there radical features and adopted market economy. LIke CHina adopted state capitalism.