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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
A recessionary gap. Equilibrium GDP is $600 billion, while full employment GDP is $700 billion. Employment will be 20 million less than at full employment. Aggregate expenditures would have to increase by $20 billion (= $700 billion -$680 billion) at each level of GDP to eliminate the recessionary gap. The MPC is .8, so the multiplier is 5.
Is belly inflation dangerous for babies?
Well, honey, I hate to burst your bubble, but belly inflation in babies is not a thing. If you're concerned about your little one's tummy, best to consult a pediatrician instead of worrying about some made-up scenario. Keep calm and carry on, mama bear!
What are the different types of belly inflation and how to do them?
One way of inflating your belly is to insert a tube or hose into your anus, then, using a small hand pump or aquarium pump, begin to fill the large intestine with air or water.
The other main method is oral inflation, which can be done by gulping air or swallowing large amounts of food or water. This may include such things as eating coke and mentor or vinegar and baking soda.
What are disadvantages of Inflation?
according to my thinkings, Inflation can lead to high unemployment rate, low GDP, less exports, fall in exchange rate and also loss of international competitiveness............BY:: Hamunyela Oiva, UNAM student,windhoek...
Is gold price elastic or inelastic?
when gold is relatively cheap, people will buy lots of gold jewellery, when the price of gold goes up, people switch to silver jewellery...sowhen the price goes up, less people will want to buy - cause the demand is "sensitive" to the price...so demand is ELASTIC...
How do injections and withdrawals effect economic activity?
Injections include Export revenue, Investment and Government expenditure.
Withdrawals include Saving, Tax, Import expenditure.
All of it affects the component of Aggregate Demand hence affects the economic activity. For e.g. High savings would mean low consumption. This would cause some firms to make losses and leave the industry etc.
Why does the GDP deflator give a different rate of inflation than does the CPI?
The GDP Deflator uses the GDP calculation to work out inflation while CPI uses a basket of goods that are compared over time to work out the increase in prices
What are three stages of inflation?
1. Pre-full Employment Stage:
The rise in price level in the first stage is less than proportionate to the increase in the supply of money. Let us suppose the supply of money increases by 10%. As, a result, there will be immediate rise in the price level. Consequently, the production of goods and services receive stimulus. As a result of increase in output of goods and services, the price level will come down. But if the supply of money is again increased by 10%, the price level will rise up, giving encouragement to the production of goods and services in the economy. In this way if there is continuous increase in the supply of money, a stage will come when the output of goods and services may not increase in the same proportion in which the supply of money increases. The reason being that with the expansion of production, the supply of the factors of production goes on declining.
2. Full Employment Stage:
If the supply of money continues to increase without any interruption, then after some time production will cease to increase, or in other words, production will become stagnant. The reason being that all productive resources are already fully employed. Extra resources are not available for a further expansion of production. Hence, the further expansion of production comes to an end. Since production becomes constant, the price level now starts increasing in the same proportion in which the supply of money increases.
3. Post-full Employment Stage:
If the supply of money continues to increase even after the time of full employment, then for some time the price level will increase in the same proportion in which supply of money increases. But after that the supply of money increases so much that the public loses confidence in it and the increase in the price level is much more than the increase in supply of money. For example, if the supply of money is 10%, then the price level increases by 20%, 30% or even 40%. In such a situation, it becomes difficult, to check the rise in the price level. This is the final stage of inflation. In this stage, the prices rise so high that money exchange comes to be replaced by commodity exchange in due course of time
Advantages and disadvantages of government using fiscal or monetary policy?
1.Capital formation: Fiscal policy has played a very important role in raising the rate of capital in country-in private as well as public sector. A major part of budgetary resources has been invested in Public Sector enterprises which have resulted in increase in gross domestic capital formation as percent of GDP from 10.2 percent in 1950-51 to 22.9 in 1997-98 and to 23.7 percent in 2001-02.
2. Resource Mobilisation: - Fiscal policy has helped to mobilize resources through taxes, savings, public debt etc. for economic development of the country. Resources mobilisation which was 70% in 1965-66 has increased to 90% in 2001-2002.
3. Incentives to Private Sector: - Private sector has been encouraged under fiscal policy for investment and production. Tax concessions, such subsidies exemptions in taxes have been given as incentives to private sector units set up in backward areas and expert oriented units. Similarly subsidies and tax concessions have also been given to encourage imports and as a result it has affected exports and imports of the country.
4. Encourage Savings: - Various incentives have been given to raise the rate of savings in household and corporate sector. To encourage savings in household sector various concessions and tax benefits have been given on fixed deposits, life insurance schemes, Kisan Vikas Patras (KVPs), National Saving Certificates (NSCs), provident funds etc. savings have been encourage in corporate sector by offering them tax concessions and tax exemptions.
5. Poverty alleviation and Employment Generation: -To fulfill one of its major objectives of providing full employment, allocation of huge amount has been made in fiscal policy to eradicate poverty and generate employment. For this a huge amount has been spent on different schemes like twenty point programme, Integrated Rural Development Programme (IRDP), Jawahar Rpzgar Yojana (JRY) etc.
6. Reduction in Inequality of Income and Wealth: -Fiscal Policy of the country has been making constant endeavour to reduce inequality of income and wealth. Resources have been mobilized from rich class to poor by way of progressive taxes, wealth tax, corporation tax and capital gain tax etc. and this money has been utlised for the welfare of poor people.
7. Export Promotion: - Export has been encouraged by way of providing subsidies, concessions, tax exemptions, cash subsidies etc. Exports have shown a rise from 4.5 percent in 1960-61 to 23.4 percent in 2001-2002. Import duty on raw material and capital goods used for production of goods meant for export has also reduced with a view to encourage exports.
Read more: Advantages_of_fiscal_policy
Possible reasons for variations in elasticity?
Elastic goods are goods where a change in price leads to a change in the quantity demanded. Examples of this would be clothes. If Store X raised their prices, the public would substitute and buy clothes from Store Y instead.
Inelastic goods are where a change in the price does not lead to a significant change in the quantity demanded. A good example of this would be medicine. Even if a pharmaceutical company increases their prices, their customers STILL need their medication, so they will still purchase it at the higher price.
A change in elasticity can arise from the market for certain products expanding. A good can become more elastic if more substitute goods are introduced to the market. On the other hand, a good can become more inelastic if substitute goods are taken off the market.
Why stock market is good example for perfect competition?
In a way, stock markets are an example of perfect competition. There are hundreds of buyers and sellers. When buying shares you can choose from innumerable different brokers. ... There are few barriers to entry and exit; anybody can buy shares if they have enough money.
How much is the lady with an ermine Cracow worth today?
Any work by Leonardo da Vinci is worth SEVERAL hundred million dollars because there are so few of them that exist. I don't believe this painting will ever come up for sell so it is hard to give an estimate of how much it would cost, but I'd say at least $500 million dollars.
What groups would most likely be hurt financially by unexpected inflation?
which of the following group is most hurt by unexpected inflation
What are the advantages of high rate of inflation for mortgage lenders?
There aren't. It means they're being paid back with money that's worth much less than the money they originally lent.
YES
Why is deflation destructive to the nation's economy?
Not enough money is spent to keep business activity moving
Is inflation always bad for economy?
Inflation is certainly not always bad for economy, in fact a moderate level of inflation matching to it's growth rate is good for the country. Moderate inflation suggest demand in the system while no inflation or deflation suggest demand collapse which is much more dangerous than Inflation.
For Instance US inflation is 1.5 to 2% while it's growth is 2-3%. This equation is ok. A Country having an inflation equal to it's growth rate is not bad though it is always preffered to have lower inflation and high growth rate. But it is difficult to achieve on a continuous basis.
Reserve banks all over the world prefer and try hard to have moderate inflation and would worry if there is a situation of deflation. But too high inflation will make the currency of the country very weak against the major global currencies and will bring the economy to it's knees, like what happened in case of Zimbabwe.
What best describes Islamic empires during the postclassical period?
They produce important advances in mathematics, science, and medicine
