Introduction to Business
... Useful for understanding inflation A quick computation of how long it takes prices to double at various rates of growth Example: If houses increase in price at 9% a year, how long for the price to double? Answer: Divide 72 by 9% and you get the approximate number of years it takes to double ...
... Useful for understanding inflation A quick computation of how long it takes prices to double at various rates of growth Example: If houses increase in price at 9% a year, how long for the price to double? Answer: Divide 72 by 9% and you get the approximate number of years it takes to double ...
Inflation
... deemed the best rate for a stable economy (higher than that and inflation can have negative effects; lower than that can mean a stagnant economy) As prices rise, the value of money falls – the same money can’t buy as much as it used to. The Bank of England is charged with the responsibility of contr ...
... deemed the best rate for a stable economy (higher than that and inflation can have negative effects; lower than that can mean a stagnant economy) As prices rise, the value of money falls – the same money can’t buy as much as it used to. The Bank of England is charged with the responsibility of contr ...
Ch. 13 Study Guide Multiple Choice ____ 1. Which of the following
... 3. According to the demand-pull theory, what is responsible for inflation? A. Producers raise prices to meet existing demand. B. The economy is in a wage-price spiral. C. Too much money is in circulation. D. Demand for goods and services exceeds existing supply. 4. How has the distribution of income ...
... 3. According to the demand-pull theory, what is responsible for inflation? A. Producers raise prices to meet existing demand. B. The economy is in a wage-price spiral. C. Too much money is in circulation. D. Demand for goods and services exceeds existing supply. 4. How has the distribution of income ...
Macroeconomics Baseball Review
... Are most goods bought by the government @ the federal or state level? Are taxes classified as leakages or injections? When did the US gov’t start to fight poverty? (Lyndon Johnson) Which country suffered hyper-inflation in the early 1920s? Whom does inflation help? What is currency? Which ethnic gro ...
... Are most goods bought by the government @ the federal or state level? Are taxes classified as leakages or injections? When did the US gov’t start to fight poverty? (Lyndon Johnson) Which country suffered hyper-inflation in the early 1920s? Whom does inflation help? What is currency? Which ethnic gro ...
Day Two - Southwestern
... “Keynesian” economics is “demand-side” economics, where aggregate demand is considered central to the performance of the national economy. In this theory there is a tradeoff: We can have higher growth and lower unemployment OR lower inflation. High AD -> high output and low unemployment; high (deman ...
... “Keynesian” economics is “demand-side” economics, where aggregate demand is considered central to the performance of the national economy. In this theory there is a tradeoff: We can have higher growth and lower unemployment OR lower inflation. High AD -> high output and low unemployment; high (deman ...
Macro Ch 7 presentation 1 Economic Growth and Inflation
... 1. An increase in real GDP over some time period 2. An increase in real GDP per capita occurring over some period of time ...
... 1. An increase in real GDP over some time period 2. An increase in real GDP per capita occurring over some period of time ...
Macroeconomics: An Introduction
... The 1950s: The Post-war recovery The1960s: Continued growth with some inflation The 1970s’ stagflation Controlling inflation and supply side economics in the 1980s Prosperity in 1990s (Low inflation and low unemployment) Slow down in 2000-2001; mild recovery in the following years ...
... The 1950s: The Post-war recovery The1960s: Continued growth with some inflation The 1970s’ stagflation Controlling inflation and supply side economics in the 1980s Prosperity in 1990s (Low inflation and low unemployment) Slow down in 2000-2001; mild recovery in the following years ...
Problem of Inflation in India
... is computed on weekly basis. Services and non taxable commodities are not included . • GDPD= Derived from national income, services included ,coverage more than WPI • CPI-IW=It measures inflation in terms of cost of living condition of industrial workers, changes in retail prices of goods and servic ...
... is computed on weekly basis. Services and non taxable commodities are not included . • GDPD= Derived from national income, services included ,coverage more than WPI • CPI-IW=It measures inflation in terms of cost of living condition of industrial workers, changes in retail prices of goods and servic ...
CPI (Consumer Price Index) and Inflation
... Consumer Price Index (CPI) • 80,000 of the most commonly bought consumer goods ...
... Consumer Price Index (CPI) • 80,000 of the most commonly bought consumer goods ...
Merit - NZQA
... Part A lacks correct economic detail in the explanation for Merit, foreign tourist spending shifts the export receipts component of aggregate demand in graph one. Part B has some of the expectation of Merit. The detailed explanation shows depth by providing two reasons for the cause of inflation to ...
... Part A lacks correct economic detail in the explanation for Merit, foreign tourist spending shifts the export receipts component of aggregate demand in graph one. Part B has some of the expectation of Merit. The detailed explanation shows depth by providing two reasons for the cause of inflation to ...
Notes - Angelfire
... A price index is a measurement that shows how the average price of a standard group of goods changes over time. The consumer price index (CPI) is computed each month by the ___________________________. CPI is determined by measuring the price of a _________________ meant to represent the typical ...
... A price index is a measurement that shows how the average price of a standard group of goods changes over time. The consumer price index (CPI) is computed each month by the ___________________________. CPI is determined by measuring the price of a _________________ meant to represent the typical ...
Chapter 24: Measuring the Cost of Living
... Tells us overall how much prices are changing for the average consumer ...
... Tells us overall how much prices are changing for the average consumer ...
National Income
... Maximizing employment is a primary macroeconomic goal because of what it gains for us and what we lose in its absence. Increase GDP—full employment Full employment- The highest natural level of employment that our economy can attain at a given moment. Inflation Inflation rate: The increase in prices ...
... Maximizing employment is a primary macroeconomic goal because of what it gains for us and what we lose in its absence. Increase GDP—full employment Full employment- The highest natural level of employment that our economy can attain at a given moment. Inflation Inflation rate: The increase in prices ...
Chapter 13 vocabulary - Econ
... group of goods meant to represent the “market basket” of a typical urban consumer 14. Market basket- ...
... group of goods meant to represent the “market basket” of a typical urban consumer 14. Market basket- ...
CPI (Consumer Price Index) and Inflation
... not a problem- but what if the price of tires, gas, groceries, toys, wood, cars, steel, etc were on the rise? ...
... not a problem- but what if the price of tires, gas, groceries, toys, wood, cars, steel, etc were on the rise? ...
Inflation
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.When the price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the consumer price index) over time. The opposite of inflation is deflation.Inflation affects an economy in various ways, both positive and negative. Negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future.Inflation also has positive effects: Fundamentally, inflation gives everyone an incentive to spend and invest, because if they don't, their money will be worth less in the future. This increase in spending and investment can benefit the economy. However it may also lead to sub-optimal use of resources. Inflation reduces the real burden of debt, both public and private. If you have a fixed-rate mortgage on your house, your salary is likely to increase over time due to wage inflation, but your mortgage payment will stay the same. Over time, your mortgage payment will become a smaller percentage of your earnings, which means that you will have more money to spend. Inflation keeps nominal interest rates above zero, so that central banks can reduce interest rates, when necessary, to stimulate the economy. Inflation reduces unemployment to the extent that unemployment is caused by nominal wage rigidity. When demand for labor falls but nominal wages do not, as typically occurs during a recession, the supply and demand for labor cannot reach equilibrium, and unemployment results. By reducing the real value of a given nominal wage, inflation increases the demand for labor, and therefore reduces unemployment.Economists generally believe that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. However, money supply growth does not necessarily cause inflation. Some economists maintain that under the conditions of a liquidity trap, large monetary injections are like ""pushing on a string"". Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities. However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.Today, most economists favor a low and steady rate of inflation. Low (as opposed to zero or negative) inflation reduces the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reduces the risk that a liquidity trap prevents monetary policy from stabilizing the economy. The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control monetary policy through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.