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In certain economic circumstances, governments decide to follow a course of action to increase inflation. As one example, they do this by in affect, printing money, in order to fund social projects. The idea here is cause a controlled amount of inflation, which is not always easy to do.
Printing money to cause inflation can also be used to counter "deflation". In serious recessions and depressions, the money supply "decreases" as the value of property declines and stocks and bonds decline as well. Also, some people will cut back spending to such a large degree that businesses fail or must lay off employees. In addition to the aforementioned examples, some people will invest in precious metals. This decreases the amount of "spendable cash" in the hands of consumers.
By inflating the money supply, the affects of deflation can be, not always, be corrected.
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What refers to the persistent increase in the prices of goods and services?
inflation
What type of yield curve predicts a future increase in inflation?
A inverted slope yield curve pridecits future increase in inflation.
How do you define grade inflation?
Grade inflation is the increase over time of academic grades, faster than any real increase in standards.
What is the relevance of the Phillips curve to modern economies?
The Phillips curve plots inflation against unemployment and was first published in 1958. It was used in policy making to reduce unemployment by accepting a higher level of inflation. However, as inflation increases workers begin to factor the increase into their wage demands, e.g. if the workers know that inflation is running at 5% and want a 'real' wage increase of 5% they'll ask for 5%+5%=10% wage increase (if they only receive an increase of 5% the real value of their wages will stay the same and if they have no increase the real value will fall by 5%). Because all workers factor in inflation into their wage demands unemplyment returns to its original level while inflation remains high. This realisation was made after the economic woes of the 1970s and 80s where there was significant inflation and unemplyment in many countries - something that had been unpredicted. The relevance of the Phillips curve today serves as a warning that governments cannot trade unemployment for inflation. This is why Central Banks only target inflation and not unemloyment in their monetary policy decisions.
If expected inflation increases interest rates are likely to increase?
Yes, inflation and increases in interest rates usually go hand-in-hand, though inflation is not the sole cause of an increase in interest rates
What refers to the persistent increase in the prices of goods and services?
inflation
Increase in money supply followed by an increase in prices?
inflation
What does not increase as a country develops?
Inflation
What type of yield curve predicts a future increase in inflation?
A inverted slope yield curve pridecits future increase in inflation.
Q: What is inflation?
Inflation is the rate of increase in prices over a given period of time.
How do you define grade inflation?
Grade inflation is the increase over time of academic grades, faster than any real increase in standards.
What is the word for Extremely rapid increase?
"inflation"
If expected inflation increases interest rates are likely to increase?
Yes, inflation and increases in interest rates usually go hand-in-hand, though inflation is not the sole cause of an increase in interest rates
What is the relevance of the Phillips curve to modern economies?
The Phillips curve plots inflation against unemployment and was first published in 1958. It was used in policy making to reduce unemployment by accepting a higher level of inflation. However, as inflation increases workers begin to factor the increase into their wage demands, e.g. if the workers know that inflation is running at 5% and want a 'real' wage increase of 5% they'll ask for 5%+5%=10% wage increase (if they only receive an increase of 5% the real value of their wages will stay the same and if they have no increase the real value will fall by 5%). Because all workers factor in inflation into their wage demands unemplyment returns to its original level while inflation remains high. This realisation was made after the economic woes of the 1970s and 80s where there was significant inflation and unemplyment in many countries - something that had been unpredicted. The relevance of the Phillips curve today serves as a warning that governments cannot trade unemployment for inflation. This is why Central Banks only target inflation and not unemloyment in their monetary policy decisions.
What does the inflation date indicate?
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 dollar you own buys a smaller percentage of a good or service. Demand-Pull Inflation, Cost-Push Inflation etc.
How is inflation caused?
we get two types of inflation demand-pull inflation, this inflation is happened from demand increase, the demand increase, the price gonna increase too. the cpi ( inflation ) index also increase. another type is cost-push inflation, this type is from cost increase. the wage rate and the price of raw materials increase, the cost of goods and service going up, and the price of goods and services also going up. that's the reason why inflation happened. hope this can help you
What is a pay increase to keep up with inflation called?
Cost-of-living increase.
