Inflation

THE SITE IS NOT AS DETAILED i THOUGHT IT WOULD BE.

No, it is an endogenous variable.

Most people have debt and the 3.5% increase in interest rates over the last 18 months has increased the cost of debt by close to 24%. This means that we pay 24% more for the same amount we borrowed than we did 18 months ago. Before I look at how interest rate increases can help to manage the rate of inflation I think we first need to understand what inflation means. Contrary to what many people think the direction of costs is always upwards when one speaks of inflation. When inflation comes down it does not mean that prices have reduced but only means that the increase in prices of goods and services are less. Inflation is the measure of the percentage increase in the prices of goods and services. As an example, we may have paid R4 for a liter of milk a year ago and now pay R5. This means that milk inflation is 25% for the year. If we pay R5.5 for milk next year it means that milk inflation is 10%. Milk inflation has come down even though we pay 50 cents more for milk. It means that the rate at which the price of milk increased is slower. The official consumer inflation rate is reported in two figures namely the CPI and the CPIX. CPI is the Consumer Price Index and CPIX is the Consumer Price Index excluding interest rates. The August figure for these two measures where 6.8% and 6.3% respectively. The Reserve Bank has a target to keep inflation between 3 and 6% and since the present figures are above the top end of the target, action needs to be taken to bring inflation back into the range. One instrument which can be used to manage inflation is interest rates. How does this work? The typical economic cycle is about supply and demand. The more people chase the same product the more the pressure to increase prices and the more products are available for the same number of people the more the pressure to reduce prices or to at least keep them at the same level. As an example lets say there are 10 people in the country and each of them has money to buy bread. If there is one bakery and they produce only 5 loaves of bread it means these 10 people will compete to buy the 5 loaves. To get a loaf of bread they will be willing to pay more and hence the price increases. Let us turn this around let us say there are two bakeries and they produce 20 loaves of bread. Now you have a situation where the 10 people can get more bread than what they need and all of a sudden the bakeries will have to compete and may reduce their prices to get the people to buy their bread. Now this is obviously a very simplistic explanation of the inflation cycle. In real life it is about how much money is chasing the available goods in an economic system. Presently we have too much money chasing the available goods because people use too much debt to buy these goods and services. This places pressure on the suppliers of these goods and hence they can increase their prices. The use of debt is in a sense artificial because people are spending money which they don't have and effectively borrowing from the future.

The higher the prices of goods and services, the more we as employees want from our employers to be able to keep our standard of living. The problem is if our employers pay us more for our services without us producing a higher output than we did in the previous year we are placing more pressure on the system and the spiral of inflation increases which means we are not better off than we where before the increase. By increasing interest rates the reserve bank reduces the cash in the economy. People now pay more for debt which means there are less money chasing goods and services and therefore the pressure on the system is reduced which helps to reduce the rate at which prices increase (inflation). In our example the 10 people chasing the 5 loaves of bread pays more for their debt and hence have less money to buy bread with. The effect is that the pressure reduces and the bakeries cannot increase their prices as easily. There are many arguments for and against the use of interest rates as a tool to manage inflation. The fact is however that managing inflation is critical for any economies success and growth because inflation erodes economic value and in effect negates what is achieved with economic growth. For the academics out there do not crucify me for this simplistic explanation I am only trying to explain the principle. In truth we know that the concept of inflation and the strategies to manage it is very complex as are the number of factors influencing inflation. I trust that this will help to put the concept in perspective. We as a nation have to ensure that inflation does not get out of hand and the best way for us to contribute to this objective is by not spending money we don't have and improving our productivity, this way we deserve above inflation increases because we offer our employers more.

Both are good inflation hedges, but I would recommend a basket of commodities to diversify your bet. Try the ETF, PowerShares DB Commodity Idx Trking Fund.

Yes.

It is an inverse relationship. As inflation increases, unemployment decreases. This can be shown by the Phillips curve

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.

In India, a total of 435 commodities data on price level is tracked through WPI which is an indicator of movement in prices of commodities in all trade and transactions. It is also the price index which is available on a weekly basis with the shortest possible time lag only two weeks. The Indian government has taken WPI as an indicator of the rate of inflation in the economy.

based on the rate of price increases in three restaurants which I have eaten at for years, the price increases in the past year have been between 33% and 50%

CPI (Consumer Price Index) is generally more favoured than the RPI (Retail Price Index) because the RPI excludes pensioner households and the highest income households, so it's misleading in this sense.

Back to CPI, which measures inflation, the only real problem is that it samples 650 goods from 7,000 households nationwide. Because this is such a small percentage of the whole population, it's not representative - it just gives an indication of measure of the general level of prices. But on the whole it is more effective that than the RPI.

Cost-of-living increase.

Inflation prone is tending toward rising prices and costs, usually accompanied by rising incomes.

Assuming the coin is circulated and has no mintmarks, retail value is $23.00-$31.00 depending on how much wear the coin shows. The 1890 Morgan is a common date.

How can i apply statistical formulas in social science.

There were no Eisenhower dollars struck in 1966. The first circulation issues weren't struck until 1971. Please check your coin again and post a new question. And in any case President Eisenhower was still alive in 1966 so his portrait could not appear on a circulating coin at that time.

It could be said that there is a tight relationship between money and sports. Sports generate a lot of revenue through advertisements, and merchandise, and also pay their players much more than what other people make.

There's no such coin. The U.S. never made any coins out of pure silver because they'd wear out almost immediately. By 1968 dimes and quarters were made of copper-nickel and halves were only 40% silver.

See the Related Question for more.

If aggregate demand increases at every price level than the demand curve shifts to the right. In the short-run the new equilibrium forms from an increase in willingness to spend, thus higher prices and higher real GDP or quantity of output.

If short-run aggregate supply increases at every price level than the supply curve shifts to the right. From the short-run to the long-run the new equilibrium forms from an increase willingness to sell, thus prices reduce to original equilibrium and output increases further.

Recap: Prices stay constant while real GDP or total quantity of output increases.

There is no such thing as a 1960 silver dollar coin.

Answering "http://wiki.answers.com/Q/In_the_simple_economics_of_a_competitive_market_price_increase_under_which_condition"

A fiscal policy that focuses on job creation would cure high inflation and high unemployment. Implementing projects like road and bridge construction would improve employment rates.

Assuming it's a large (about 40 mm) US silver dollar with an eagle on the back:

Values will vary widely, depending on the coin's exact condition.

In Very Good condition, with heavy wear yet all major designs defined, it's worth about $1,000

In Extra Fine condition, with just light visible wear, it's worth about $7,000

A rarely seen uncirculated example will be worth at least $30,000

Cleaning, damage, corrosion, and other problems will significantly reduce the values listed.

But if your coin is small (26.5 mm) and the "Liberty" you're referring to is the Statue of Liberty on the back of the coin, it's a modern Presidential dollar. 1797 is the year that George Washington's term ended, not the year the coin was minted. That's 2007 and is incused on the coin's edge.

There are a great many characteristics of a country. 4 of the characteristics are having a government, having a medical system, having a schooling system, and having a job market.

A decade of republican government put the economy in debt. During Reagan's time the money was spend on defense spending.