Effects of Quantitative Easing on Food Prices Research Paper

do of Quantitative Easing on Food Prices - Research Paper ExampleEventually, this leads to inflation. This paper demonstrates the effects that deign about because of employing numeric easing on nourishment determines. Rise in food prices One of the established effects of quantitative easing is that it results to a rise in food prices. The reason behind this item is that quantitative easing entails making of more money in order to assist in firmness the situation affecting the economy. However, making of more money contributes in undervaluing the present ones in the economy of a country. Therefore, the country d tippys to experience hyperinflation. The inflation results to a rise in various commodities. Some of these commodities include rude materials associated with the production of food. Rise in raw materials especially in the evokeing(a) sector forces most of the producers to increment the selling price of their products. Eventually the final consumer ends-up buying food at a higher price than usual. In every financial year, food producers tend to look on when they can be subject to make more profits from the price of their commodities. Therefore, the producers are forced to increase their prices with an aim of avoiding incurring losings when inflation occurs especially because of quantitative easing (Duncan 162). ... Most of the small-scale farmers stops farming because of rising prices of various country commodities ending up reducing their production. When most of the small-scale farmers fail to produce more goods as expected, the price of food in the market rises. In some cases, most of the small-scale farmers stops enacting agricultural related activities because of farming difficulties due to rise in prices of commodities. This creates a high deficit on the farm products hence a rise in food prices. Rise in international prices of raw materials and agricultural products Apart from the small-scale farmers being affected by inflation beca use of quantitative easing, large-scale farmers also tend to experience the same effects. Apart from the above outlined examples, showing effects of inflation due to quantitative easing, inflation also causes a rise in the import price index. This means that various raw materials related to agriculture like farming inputs that include fertilizers tend to rise in their prices. Some of another(prenominal) merchandise agricultural inputs that tend to rise in their prices because of inflation include farming machines and chemicals. Moreover, some of the seeds imported from other countries rise in their costs due to inflation. Failure of farmers to access the inputs contributes to low production of food hence rise in their prices. High cost of inputs makes most of the farmers fail to buy much of the products change to a decline in their activities. A decline in farming activities means that the production of legality materials will eventually be low. This contributes in making the pr ices of the produced food rise. Rise in cost of activities in food manufacturing industries There is established evidence that inflation cause