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Which economic indicator accounts for inflation and deflation by comparing average price changes to the prices of a chosen base year?
Wiki User
∙ 11y ago
consumer price index
Wiki User
∙ 11y ago
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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 economists and the Federal Reserve, who sets monetary policy. Core inflation accounts for the rise in the cost of goods EXCLUDING food and energy prices. Why do economists and the Fed prefer core inflation metrics? Because food and energy prices are much more volatile, and that volatility is often caused by sudden events such as natural disasters or geopolitical unrest. By focusing on non-food, non-energy inflation (core inflation), the Fed strips away temporary "distractions" to focus on the true interplay of supply and demand in the domestic product markets. This supply/demand interplay is crucial in setting sound monetary policy.
Is real GDP the same as GDP?
The main difference is that Real GDP accounts for inflation and is calculated using Nominal GDP. It is useful when trying to compare GDPs froms different times.
How does government intervene to lower inflation or unemployment?
The government acts on inflation through The Federal Reserve. The Federal Reserve acts on inflation by targeting interest rates through the reserve requirement. When interest rates are high, people want to keep money in their bank accounts, and inflation decreases. When interest rates are low, people are more willing to spend their money and inflation increases. Once, the Federal Reserve actually pushed the United States into a recession once to battle especially high inflation. Ever since then, it has been very important for the Federal Reserve to keep inflation in check. The government, as demonstrated during the latest recession, enacts many different stimulus packages to help the economy recover and help unemployment come down from extremely high percentages.
How can you lower the inflation rate?
Invest your money. Passbook savings accounts are not a good hedge against inflation. Buy something when the price is low, and hope for the best, or put your money into a money market account. In order to do that, you first have to accumulate money. For many people, the best way to start is with a savings account to which they make regular deposits. If you can deposit $50 every two weeks for a year, you will have sufficient funds to invest in a broad range of much better investment tools.
What happens when interest rates increase?
well, it does two things to inflation. Firstly it increases the costs of production of firms therefore shifting Aggregate supply inwards (thereby increasing cost push inflation). It also shifts aggregate demand inwards because firms and households are less likely to want to borrow money in the case for consumption and investment because it increases their costs (this particularly affects the housing market and other big ticket items). This reduces the effects of demand pull inflation. So it shifts aggregate supply and aggregate demand inwards. When AS shifts inwards inflation increases. When AD shifts inwards inflation decreases. So the government would have to decide what the best policy is to do. Generally the shift inwards in AD will have a bigger effect on inflation (especially because the decrease in consumption which accounts for 60% of AD will hit consumers more - in mortgages) and also the effect will be maximised if the part of the AS curve is inelastic meaning an almost vertical drop in the general price level.
List some accounting analytical duties?
Comparing expenses to budget. Comparing expenses to prior periods. Explaining significant increases or decreases to income and expense accounts. Comparing product profit margins amongst the company's various product line.
When comparing certificates of deposits to saving accounts one would say certificates of deposits are less liquid?
True
When comparing certificates of deposits to savings accounts one would say certificates of deposit are less liquid?
True
When should a customer start comparing checking accounts?
A customer should start comparing checking accounts any time they feel the need to start a new one or when they feel they can get a better deal. Banks are always making new offers to get in new clients so just about any time.
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 economists and the Federal Reserve, who sets monetary policy. Core inflation accounts for the rise in the cost of goods EXCLUDING food and energy prices. Why do economists and the Fed prefer core inflation metrics? Because food and energy prices are much more volatile, and that volatility is often caused by sudden events such as natural disasters or geopolitical unrest. By focusing on non-food, non-energy inflation (core inflation), the Fed strips away temporary "distractions" to focus on the true interplay of supply and demand in the domestic product markets. This supply/demand interplay is crucial in setting sound monetary policy.
What is nominal quantity?
A nominal quantity is one that is represented in current dollars, that is, without inflation effect. A quantity that accounts for inflation effects is called a "real" quantity. For more information, please see the related link below.
Where online can one find information on comparing checking accounts?
One can find information on comparing checking accounts on various financial websites, such as Bankrate, NerdWallet, and Investopedia. These websites offer detailed comparisons of different checking account features, fees, and interest rates, allowing individuals to make informed decisions based on their specific needs and preferences. Additionally, many banks and credit unions also provide information on their websites to compare their checking account offerings.
Do the "free" retirement calculators factor in the costs of inflation?
Depending on which website you visit, some free retirement calculators are set up to account for the change in inflation and cost of living over time. Be sure to check if the website you are on accounts for these things.
1 In comparing the accounts of a merchandising company with those of a service company what additional accounts would the merchandising company likely use assuming it employs a perpetual inventory?
Cost of goods sold and Gross profit
Where can one find more information on the best current interests rates on savings accounts?
A person can find the best current interest rates on savings accounts by visiting branch offices of local banks in their area and comparing interest rates.
On ChickenSmoothie if a pet is OMG so Rare how many of that pet is there?
There is no set amount, as the rarity of a pet is calculated by comparing how many pets there are of a certain kind and how many accounts there are in total.
What does monetary mean in accounting terms?
Term used when applying inflation correction to the figures on a balnce sheet, and applies to those accounts that have a nominal value that suffers impairment because inflation, to the contrary monetary items have an embedded value that changes acoording to economical conditios hence its value changes with time.
