Inflation is defined as "a period of rising prices when the purchasing power of the dollar is falling." What this boils down to is that as time goes by the dollar bills worth decreases while at the same time prices rise. Now when I say the dollar bill's value decreases I don't mean a dollar reduces to ninety cents. What this means is that one dollar can no longer buy you a pack of gum, that same pack will cost you one dollar and fifty cents. This is a cause of many things. To start the largest influence on why inflation occurs is the economic situation of a country. If a country needs more money spent on its resources or services one way of accomplishing this is to raise the minimum wage. By raising minimum wage lower income families can now earn larger amounts of money and therefore have more to spend on goods and services. However as minimum wage rises so does the cost of goods and services. Since the manufacturer of goods and services now has to pay it's employees" larger wages it has to account for that spending by raising prices. In the end an equal balance almost occurs however more money is being spent and transferred throughout the market therefore making the economy stronger.
"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. ...
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. ... When there is inflation the value of a dollar never stays constant. ... Inflation in effect wipes out your purchasing power. ... Stagflation ("The Simultaneous occurrence of substantial unemployment and inflation")(Schiller p.327) In theory inflation and unemployment move in o...
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. ...
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. ...