0
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
During Carter's administation how did the government try to fight inflation?
The Federal Reserve began raising interest rates
How do you calculate annual inflation rate using monthly inflation?
Just a thought based on logic -this is not a textbook answer and all numbers are fictional and in dollars-: If the change in inflation was the same each month you would use a simple compounding formula that is S=P(1+I)^N so to make it simple if you got 100$ (P) today and inflation increases 3.5% each month (I) then in 1 yr (that is 12 months(N)) you would have the following: S= 100$*(1+0.035)^12 à S=151.12$ That is that the 100$ will inflate to 151$ in paper (not in true value) in one year. So 100$ today in 12 months is worth 100/151.12= 66.18% of its original value that is 100$ are worth 33.82% less in this particular example and in dollars of the initial year 66.18$. In 10 yrs (120 months) 100$ with such an inflation rate would be worth 1.6$. For different month by month inflation rates simply do it step by step: i.e. January= 100$+100$*4.2%= 104.2 February=104.2 +104.2* 3.4%=107.742 and goes on for every month. So once you reach the last month of the year simply divide 100/December and the inflation rate will be 100 minus that number. For January and February it is 100/107.742= 92.8 so 100-92.8 gives us 7.2% inflation. Also keep in mind to use crude month to month inflation rates and not year average inflation rates that are the average inflation of each month so far in the year. You will often find rates that are the average of this year's months against the previous year's month average. That is the average of all monthly rates until lets say May of 2009 (Jan+Feb+Marc+April+May/5) against the same of all months until May 2008. If you want to simply see the devaluation of money don't use these rates use monthly rates. Also you can use the inflation rate of this year's month against last year's but calculate it once for each year. For example from Jan 2005 to Jan 2006 = 3.4% and from Jan 2006 to Jan 2007 = 3.6% so the above formula would be Jan 05-06= 100$+100$*0.034=103.4$ Jan 06-07= 103.4$+103.4$*0.036=107.12$. This is 100/107.12= 6.65% inflation. So your 100$ have devalued 6.65% and are worth 100-100*0.0665= 93.35$ today 2 yrs later. Also remember that what is true inflation is not easily calculated and debatable. Take in mind interest rates and other facts i.e. multiplication of money from multiple loaning and the accuracy of reporting from government agencies in third world countries etc.
wen der is an increase in interest rate, d government uses as a means to reduce borrowing n in the long run it curbs inflation, because der will be low investment
What is a major problem for businesses during a period of chronic inflation?
It is a simple reason. Chronic inflation causes price rise across the board, all commodities affected. From the housewife buying vegetables to the jewelers, businessmen and everyone else using fuel.
What also happens during chronic inflation situations is the government raises the interest rates. So while prices of all goods have gotten expensive so had the cost of borrowing.
A difficult time for everyone.
Btw the way, the government raises interest rates to curb the cash flow fueling the high prices. So if the cash flow decreased then prices will fall.
lifo
What is relation between inflation and price rise?
Inflation is the prices rising due to human consumption and the economy and it affects everyone. Price increases are due to the company doing it on an individual basis per item needed.
Who is not affected by inflation?
Absolutely everybody is affected by inflation. Poor and rich people are affected by inflation although in different degrees.
rome
What is the relationship between unemployment and inflation?
There has been an inverse relation between rate of inflation and the rate of unemployment in an economy. The more the entrepreneur extends the employment opportunity the more he has to pay to that particular factor of production and the more payment to factor of production the increase in the cost of producing a unit will be observed and in order to maintain the profitability of the product the entrepreneur will inflate the price of that product. A similar process will be observed through out the economy when the government intends to create job. The price of products or services, where the workforce is installed, will increase hence an increase in the rate of inflation will be visible through out the economy.
It can be concluded from the aforesaid explanation that when a government intend to lower down the rate of unemployment it had to bear the increase rate of inflation in the national economy.
yes true
What currency is least affected by inflation?
Inflation is endemic in a capitalistic society. Different economies (currencies) are affected differently and over time there is no such thing as a safe currency.
6-16-11>>> Assuming the coin is circulated and has no mintmark, the 1922 Peace dollar is the most common date of the series. For an accurate assessment of value the coin needs to be seen and graded. Most coins have seen heavy use and show a lot of wear. In general retail values for circulated coins are $36.00-$40.00. Values are a market average and only for coins in collectible condition, coins that are bent, corroded, scratched, used as jewelry or have been cleaned have far less value if any to a collector or dealer.
Does Japan has a low inflation rate?
Inflation in Japan is negative, Japan had deflation. Meaning the cost of everything is falling, rather than increasing.
It gains purchasing power.Apex
When your country is experiencing inflation the government may try to control it by?
Yes government tries to control the inflation by increasing the supply into the market, this balances the demand supply curve
How can the media reduce the inflation rate?
The media is not an all powerful entity. It can't even predict the weather, much less stop the inflation of currency in a country.
