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Inflation
A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.
1,474 Questions
What effects does inflation have on the purchasing power of the dollar?
If inflation occurs, the value of the dollar will decrease. This is because the amount of goods that the dollar can buy now becomes less.
Inflation is measured by the Bureau of Labor Statistics. They take a "basket" of goods and record the prices of each of the goods. The basket contains items such as food and clothes that all consumers would purchase. This is then transformed in the Consumer Price Index (CPI). This is how you are able to see how much a dollar is worth compared to other years.
How do monetary policy control inflation?
Monetary policy can have an impact of inflation. The ideal state of the economy is a balance between inflation and unemployment at 4.3% which is only seen in a wartime economy.
What are three causes of inflation?
Producers raise prices to meet increased costs, which causes costs to consumers to rise.
What types of inflation in Malaysia?
Types of Inflation
There are five main types of inflation. The various types of inflation are:
Wage Inflation
Wage inflation is also called as demand-pull or excess demand inflation. This type of inflation occurs when total demand for goods and services in an economy exceeds the supply of the same. When the supply is less, the prices of these goods and services would rise, leading to a situation called as demand-pull inflation. This type of inflation affects the market economy adversely during the wartime.
Cost-push Inflation
As the name suggests, if there is increase in the cost of production of goods and services, there is likely to be a forceful increase in the prices of finished goods and services. For instance, a rise in the wages of laborers would raise the unit costs of production and this would lead to rise in prices for the related end product. This type of inflation may or may not occur in conjunction with demand-pull inflation.
Pricing Power Inflation
Pricing power inflation is more often called as administered price inflation. This type of inflation occurs when the business houses and industries decide to increase the price of their respective goods and services to increase their profit margins. A point noteworthy is pricing power inflation does not occur at the time of financial crises and economic depression, or when there is a downturn in the economy. This type of inflation is also called as oligopolistic inflation because oligopolies have the power of pricing their goods and services.
Sectoral Inflation
The sectoral inflation takes place when there is an increase in the price of the goods and services produced by a certain sector of industries. For instance, an increase in the cost of crude oil would directly affect all the other sectors, which are directly related to the oil industry. Thus, the ever-increasing price of fuel has become an important issue related to the economy all over the world. Take the example of aviation industry. When the price of oil increases, the ticket fares would also go up. This would lead to a widespread inflation throughout the economy, even though it had originated in one basic sector. If this situation occurs when there is a recession in the economy, there would be layoffs and it would adversely affect the work force and the economy in turn.
Hyperinflation
Hyperinflation is also known as runaway inflation or galloping inflation. This can usually lead to the complete breakdown of a country’s monetary system. However, this type of inflation is short-lived.
Any types of inflation can affect the economy of the country. Higher inflation will result in lower purchasing power of the citizen, higher cost of living, lower quality of life and also the overall country economic activities as well. The citizen will feel dissatisfaction to the high inflation and the worst is maybe will cause negative impact to the current government of that country.
Most economists believe and agree that high inflation rate or hyperinflation is due to the excessive growth of the money supply of the country. The long sustained period of inflation is because of the money supply is growing faster than the economic growth of the country.
Inflation robs you of you savings. Inflation also causes you to pay taxes on land you sell. You have to charge more dollars just to get the same value back for your land. Then you are hit for an income tax on those cheaper dollars that you get. Inflation is like a hidden tax. It is the way that the government rips you off.
One more thing. Inflation creeps you up into a higher tax bracket. It may even trigger the ATM. To get a good perspective on inflation you may want to read the book, The Biggest Con.
Why is inflation especially difficult for retired people?
Inflation is that increasing prices of goods and services, but the salaries of retired people do not rise as the prices. They have fixed incomes, and therefore their money buys a little less each month.
What is the value of a 1887 silver dollar?
Assuming the coin is circulated and has no mintmark, the 1887 Morgan dollar is common. The retail values are $32.00-$38.00 depending on condition. Values are a market average and only for coins in collectible condition, coins that are bent, corroded, scratched, used as jewelery or have been cleaned have far less value if any to a collector or dealer
What is the Practical application of law of demand and supply in economics?
The law of demand denotes that a drop in the rate of a commodity hikes the volume demanded. The price elasticity of demand measures the volume demanded responds to a variation in price. Demand for a commodity is said to be elastic if the volume demanded reacts considerably to variations in price.
Demand is said to be inelastic if the volume demanded reacts only slightly to variations in the price. The price elasticity of demand for any commodity measures how enthusiastic consumers are to shift from the commodity as its price hikes. Therefore, the elasticity reproduces the many economic, social and psychological forces that shape consumer tastes. Depending on familiarity, nevertheless we can denote common rules about what ascertains the price elasticity of demand.
How did inflation make the economic situation in post-WW1 Germany worse?
In the era following World War I, Germany suffered from severe economic inflation due to several factors. First, its economy had been weakened by the war-effort. Second, it could not achieve stability in its political administration, thus no consistent (or successful) economic policies could be effected. Third, it was saddled with heavy reparation-payments to the victors of the war, mainly Great Britain and France.
expenditure approach is compute by GDP by adding the money spent by buyers on final goods and services.
what are final goods?what are intermediate goods?whats the difference? Expenditure means that the money which is earned for the stur-ups for the business or any investigations for the business to support with any equipment s or for example stuff trainings. In economics, business, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost…
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What is the different between inflation and unemployment?
The number of people unemployed is the number of people in the country who are out of work and who are available for work at current market wage rates. This can easily be changed to a percentage by relating the number of people unemployed, to the total number of people in the labour force.
Inflation is the general increase in prices over a 12 month period. This is measured by taking weighted averages of all consumer products (weighted on the frquency of purchase) and analysing the trend of overall prices. This is often called the Consumer Price Index (CPI) or Harmonised Index of Consumer Prices (HICP). This shows how much, as a percentage, the general price levels of all consumer goods have changed over the year.
The two have been analysed together using the Phillips curve which shows the rate of inflation plotted against the rate of unemployment.
Some other key terms you might find useful (try these in wikipedia maybe): Phillips Curve, Keynesian economics.
Hope this helps
Why did farmers want inflation?
Inflation would help pay off loans Inflation would help pay off loans
What is the value of a dollar?
Money allows the benefits of goods and services to retain their worth over time and distance. Let's say Igrow tomatoes. I can only eat so many when I get a spring crop. But I might be able to trade them for some peaches that my neighbor grows. But what if I want apples? My neighbor's apple tree won't produce fruit until late autumn. By that time my tomatoes will be mush. By being able to sell all of my tomatoes while people need them, I can temporarily convert their value into money, to use later to buy other goods when I want or need them. The same is true of services. I canbuild a fence for a doctor, but if I'm not sick, he has nothing of value to compensate me for my time. By paying me with money, I can transfer the benefit of my work by paying for something that I want from someone else.
What is the unemployement rate and inflation rate for England?
the unemployment rate in England is 7.90% as of July. the inflation rate in England is 1.3%
What are the four basic economic questions?
The four fundamental questions of economics are:
1-What will be produced?
2-How will the goods and services be produced?
3-Who will get goods and services?
4-How will the system accommodate changes?
I hope this helps you. Good luck!
Effect of globalization on Indian economy?
Actually Globalisation happened in 1991 in India. Its main intention was to liberalise, privatise and Globalise the industrial sectors. before this industries were facing so much government intervention, so after that industrial sectors became almost free to make their own decision about establishing a new branch, producing the products and marketing etc,. Drastic change is that now the Indian counsumer is free to purchase the product which he likes from anywhere in the world. foreigners can also buy from India. so the economies off althe nations are interdependent on other. that's why we also have G8 and G20 summits.
How much would 1800 dollars in 1977 be worth today?
You would be the riches' person on Earth
and become president
What effect does inflation rates have on the government?
The true definition of inflation is like the story I am about to tell. If there was only 1 place in the country to buy potatoes, they would be very expensive, right? On the other hand, if a potato truck was on every corner selling them, they would be cheap. Right or wrong? The same with dollar bills and in this day and age, dollars are also introduced into the economy by electronic transfer. The fed government does not control the almighty dollar. The Federal Reserve does. It is our Central Bank which is world wide also. They flood the market with excess dollars that drives down the value or worth of the dollar. The more there is of anything, the less it is worth. Then, when the dollar is worth less, it takes more to buy a given item. That is true inflation. It is not that a gallon of milk is going up, it is the value of the dollar going down and it takes more of them to pay for the same thing. Now, who benefits from this? Let's see. It is not hard to see that if the Fed Reserve floods and floods the market, even in times like these, they are doing it with dollars backed by nothing but the faith and credit of Uncle Sam. Their cost is paper and ink or an electronic check to the Federal gov or Federal Reserve Banks. And I might add they are charging 0% or a little above right now. But when times get good, look out because the Federal Reserve System will raise interest rates dramatically. They will be collecting interest on dollars that are actually worth or backed by NOTHING . Not gold or silver. If money was backed by gold or silver they could not manipulate the interest rate like they do nor print money freely at will. Look at the top of any 1 dollar, 5 dollar, etc. It reads Federal Reserve Note. Only legal because congress voted it in. It is only paper and ink backed up by nothing. It is a note only!
It is the Federal Reserve System or Central Bank that benefits from inflation but at the same time, the federal government has allowed itself to borrow any and all the money it wants from The Federal Reserve. They can walk right in and the man behind the desk simply pulls out the check book and bingo like magic there is all the money they want. And when that check or any check is deposited, it is done so in a bank that is regulated or a member of the Federal Reserve System.
And I don't think they will bounce their own checks, DO YOU? With a Central Bank, any country can go behind the backs of the people and collect more money without them knowing it and revolting.
