Some economists, particularly the Modern Monetary Theory School, support the creation of a stock of unskilled labour in the form of a state-funded employment guarantee. Anyone who was ready, willing and fit for work would be employed at a specified nominal wage. Employment and stabilizing prices of unskilled labour should ensure price stability for the economy as a whole, bring the unemployment rate down to zero in a sustainable way and create an effective minimum wage. [8] The main measure of buffer stocks, which creates price stability, is often combined with other mechanisms to achieve other objectives, such as the promotion of domestic industry. This result is achieved by setting a minimum price for a given product above the equilibrium price, to the point where supply and demand curves intersect, which guarantees a minimum price to producers, encourages them to produce more, thus creating a surplus ready to be used as a buffer camp. Price stability itself can also attract companies to the market and continue to stimulate supply. The advantage is security of supply (for example. B food security); the downside is huge stocks or, in other cases, the destruction of raw materials. The scheme also makes it more expensive to purchase domestic products for other countries and operating such a scheme can be costly for the operator. [Citation required] To bring prices back to the target price, the government must sell goods from the buffer warehouse and increase supply to S1. Most buffer storage systems operate in the same rough direction: first, two prices are determined, one floor and one ceiling (minimum and maximum price).
If the price drops close to the price of the land (after z.B. has found a new silver-rich vein), the system operator (usually government) will start buying back the stock to ensure that the price does not fall further. Even if the price rises close to the ceiling, the operator lowers the price by selling its stakes. In the meantime, it must either store the goods or keep them away from the market (for example. B by destruction). When a basket is stored, their price stabilization can in turn stabilize the overall price level and prevent inflation. This scenario is shown on the right. Like the wheat market, the price of normal crop years (S1) is within the permitted range and the farmer is not obliged to act. However, during the bumper years (S3), prices began to fall and the government had to buy wheat to avoid the collapse in the price; Similarly, in years of poor harvests (S2), the government must sell its stocks to keep prices low. The result is a much smaller price drop. [Citation required] Price stability then leads to greater common well-being (the sum of the sum of To maintain the price at TP, the government must buy excess stocks (Q2-Q1) and store the goods.