Inflation, Deflation, Hyperinflation and Stagflation.
There are four ways the economy works when it comes to prices, employment, and what the value of the dollar is. These are inflation, deflation, hyperinflation and stagflation. Inflation can be a good thing or a bad thing, in a good economy with low employment it is good to have inflation, but when there is bad unemployment inflation is a bad thing because people do not have or earn enough money to keep up with changing prices. Inflation decides a lot in the way our economy runs and works and we use it to measure many different things.
Inflation ("A situation in which the cost of living is rising and the value of money is shrinking")(Bade and Parkin p. G-4), is basically how far will your money go and what can you afford to buy with it. When there is inflation the value of a dollar never stays constant. Money is purchasing power and as prices go up you do not have the same amount of purchasing power, you have less and less. Things are a lot more expensive than they used to be, a lot of things have even doubled in price. Prices seem to go up but salaries and wages do not seem to go up as fast as prices do. Inflation usually reduces the level of economic activity that happens within an economy. Inflation in effect wipes out your purchasing power. As time goes by and inflation rises you can not buy as many goods as you could say a year ago. The output demanded usually goes down as inflation goes up because people can not afford to buy as much. One type of inflation is demand-pull inflation which is when consumers start buying more goods and services and producers see this and in turn start, raising prices to capitalize on people spending. Another form of inflation is cost-push inflation, which is when one industry taking a, bad hit or deciding to raise prices has a direct effect on another industry which in turn has to raise prices. With inflation when you borrow money today it is of less real value when you pay it back later.
"Inflation that is higher than expected benefits debtors. Inflation that is lower than expected benefits creditors."... Inflation was first noticed after the adoption of capitalism. ... The law of demand dictates this cause of inflation. ... While it is true that actual inflation normally does not stray far from anticipated inflation, an unanticipated inflation causes a loss to creditors that can"t be avoided. ...
Inflation is defined as a sustained rise in the general price level. When the inflation figures' come out once a month and are quoted on the news, the newsreaders give certain percentage rates of inflation'. ... This is much harder when inflation is high. High inflation tends to coincide with variable inflation and, therefore, very unstable prices. Unanticipated inflation causes uncertainty. ...
Inflation occurs when there is a sustained increase in the general level of prices. ... Inflation can cause a number of problems for an economy, so it can be said that there are costs of inflation. ... Inflation can cause a redistribution of wealth from savers to borrowers, because the real value of debts (the nominal value minus the inflation rate) is falling. ... Finally, inflation can cause problems if a country has higher inflation than overseas, as industry becomes less competitive and export markets suffer. ... This means that a rise in the money supply doesn't always cause infla...
What is inflation? ... Hence, inflation is not easy to define in practice. This should be kept in mind when discussing how to defeat inflation. ... Some say that inflation is not only expected, but also often, needed. ... There are even examples of inflation declining while the economy booms. ...
The answer is inflation. ... When this happens we may get demand-pull inflation or cost-push inflation. ... There are four other types of inflation that I will talk about and those are anticipated inflation, unanticipated inflation, stagflation, and hyperinflation. When we are expecting inflation to occur, we have anticipated inflation. ... The next type of inflation is unanticipated inflation. ...
Inflation can be divided into cost-push inflation and demand-pull inflation. Cost-push inflation is defined as "inflation whose initial cause is a rise in production costs". ... Inflation expectations can also cause inflation. ... Not every one suffers from the inflation. ... Today the market interest rates reflect inflation and inflation expectations. ...
Inflation is defined as "a period of rising prices when the purchasing power of the dollar is falling." ... To start the largest influence on why inflation occurs is the economic situation of a country. ...
Generally, a moderate rate of inflation has been the ultimate goal. ... So too does the belief that inflation originates in the labor market. ... Are there real long-term benefits to low, or zero, inflation? What are the real effects of low inflation? ... This implies that in the short-run, nominal wage rise will not fully absorb the actual inflation, and as such, there is scope for reducing unemployment through inflation. ...
Inflation Over the last century many countries throughout the world have experienced inflation as their major economic problem. Expensive wars have traditionally been recognized as the sources of inflation. ... World War II brought the persistent inflation that economists came to expect. ... There are two opposite theories regarding inflation. Monetarism indicates that inflation is due to increases in the supply of money. ...