Results for: Inflation

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In Inflation

What is headline inflation And what is core inflation?

Headline inflation is what's important to the average person. It accounts for the rise in the cost of living. Core inflation, on the other hand, is what's important to econom… ( Full Answer )

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In Economics

How do you get inflated?

get a wetsuit it up with water for a long time let oneof your friends take a picture so they can show it toyou

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In Economics

What is in inflatables?

in generally , inflatables is a toys for kids, its fun and safe. like inflatable jump houses ,inflatable boat,inflatable balloons ,inflatable castles etc.

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In WW2 Homefront

What causes inflation not what is inflation?

A high average price level, indicated by the consumer prices index. What CAUSES inflation is an increase in a nation's money supply. More dollars (or deutchmarks) are avai…lable to bid up the price of a loaf of bread, so it DOES rise. .What are the causes of inflation of the Philippines? The basic causes of inflation were covered at AS level. This note considers the demand and supply-side courses in more detail including the impact of changes in the exchange rate and the prices of goods and services in the international economy. Cost Push Inflation Cost-push inflation occurs when businesses respond to rising production costs, by raising prices in order to maintain their profit margins. There are many reasons why costs might rise: Rising imported raw materials costs perhaps caused by inflation in countries that are heavily dependent on exports of these commodities or alternatively by a fall in the value of the pound in the foreign exchange markets which increases the UK price of imported inputs. A good example of cost push inflation was the decision by British Gas and other energy suppliers to raise substantially the prices for gas and electricity that it charges to domestic and industrial consumers at various points during 2005 and 2006. Rising labour costs - caused by wage increases which exceed any improvement in productivity. This cause is important in those industries which are 'labour-intensive'. Firms may decide not to pass these higher costs onto their customers (they may be able to achieve some cost savings in other areas of the business) but in the long run, wage inflation tends to move closely with price inflation because there are limits to the extent to which any business can absorb higher wage expenses. Higher indirect taxes imposed by the government - for example a rise in the rate of excise duty on alcohol and cigarettes, an increase in fuel duties or perhaps a rise in the standard rate of Value Added Tax or an extension to the range of products to which VAT is applied. These taxes are levied on producers (suppliers) who, depending on the price elasticity of demand and supply for their products, can opt to pass on the burden of the tax onto consumers. For example, if the government was to choose to levy a new tax on aviation fuel, then this would contribute to a rise in cost-push inflation.Cost-push inflation can be illustrated by an inward shift of the short run aggregate supply curve. This is shown in the diagram below. Ceteris paribus, a fall in SRAS causes a contraction of real national output together with a rise in the general level of prices. Demand Pull Inflation Demand-pull inflation is likely when there is full employment of resources and when SRAS is inelastic. In these circumstances an increase in AD will lead to an increase in prices. AD might rise for a number of reasons - some of which occur together at the same moment of the economic cycle* A depreciation of the exchange rate , which has the effect of increasing the price of imports and reduces the foreign price of UK exports. If consumers buy fewer imports, while foreigners buy more exports, AD will rise. If the economy is already at full employment, prices are pulled upwards.* A reduction in direct or indirect taxation . If direct taxes are reduced consumers have more real disposable income causing demand to rise. A reduction in indirect taxes will mean that a given amount of income will now buy a greater real volume of goods and services. Both factors can take aggregate demand and real GDP higher and beyond potential GDP.* The rapid growth of the money supply - perhaps as a consequence of increased bank and building society borrowing if interest rates are low. Monetarist economists believe that the root causes of inflation are monetary - in particular when the monetary authorities permit an excessive growth of the supply of money in circulation beyond that needed to finance the volume of transactions produced in the economy.* Rising consumer confidence and an increase in the rate of growth of house prices - both of which would lead to an increase in total household demand for goods and services* Faster economic growth in other countries - providing a boost to UK exports overseas.The effects of an increase in AD on the price level can be shown in the next two diagrams. Higher prices following an increase in demand lead to higher output and profits for those businesses where demand is growing. The impact on prices is greatest when SRAS is inelastic.In the first diagram the SRAS curve is drawn as non-linear. In the second, the macroeconomic equilibrium following an outward shift of AD takes the economy beyond the equilibrium at potential GDP. This causes an inflationary gap to appear which then triggers higher wage and other factor costs. The effect of this is to cause an inward shift of SRAS taking real national output back towards a macroeconomic equilibrium at Yfc but with the general price level higher than it was before. The wage price spiral - "expectations-induced inflation" Rising expectations of inflation can often be self-fulfilling. If people expect prices to continue rising, they are unlikely to accept pay rises less than their expected inflation rate because they want to protect the real purchasing power of their incomes. For example a booming economy might see a rise in inflation from 3% to 5% due to an excess of AD. Workers will seek to negotiate higher wages and there is then a danger that this will trigger a 'wage-price spiral' that then requires the introduction of deflationary policies such as higher interest rates or an increase in direct taxation. Inflation influences in the British economy The diagram summarises some of the key influences on inflation. Reading from left to right:* Average earnings comprise basic pay + income from overtime payments, productivity bonuses, profit-related pay and other supplements to earned income* Productivity measures output per person employed, or output per person hour. A rise in productivity helps to keep unit costs down. However, if earnings to people in work are rising faster than productivity, then unit labour costs will increase* The growth of unit labour costs is a key determinant of inflation in the medium term. Additional pressure on prices comes from higher import prices, commodity prices (e.g. oil, copper and aluminium) and also the impact of indirect taxes such as VAT and excise duties.* Prices also increase when businesses decide to increase their profit margins. They are more likely to do this during the upswing phase of the economic cycle. ( Full Answer )

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In Inflation

What is a inflatation?

Quoted from Wikipedia.org In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price le… ( Full Answer )

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In Science Experiments

How do you inflate an inflatable toy underwater?

You could fill your lungs with air and drop below the surface of the water and fill it one breath at a time, but a more awesome way would be to take a container of compressed … ( Full Answer )

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In Inflation

What is that inflation?

Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every … ( Full Answer )

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In Inflation

What is Zero inflation and Mild inflation?

Zero inflation is where the economy reach a state of 0% inflation rate. This is not really good in the sense that it shows the economy is stagnant/not growing. This may turn a… ( Full Answer )

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In Inflation

What is inflation and causes of inflation?

inflation is defined as a sustained increase in the general level of prices for goods services

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In Uncategorized

What is an inflatable?

Inflatable is generally made of high strength, fire and water proofPVC tarpaulin. There are Giant Inflatables,InflatableBouncers,Inflatable Castles,Inflatable Combos,Inflatabl… ( Full Answer )