Chapter 3 Vocab Inflation: An increase in the general level of prices for goods and services. Disinflation: Occurs when prices are rising, but at a slow rate. Reflation: Occurs when prices are high but then drop due to lower demand. Hyperinflation: When prices are rising so rapidly they are out of control. Deflation: The lowering of overall price levels. Demand-pull inflation: Occurs when consumers want to buy more goods and services than producers supply. Cost-push inflation: Occurs when producers
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Question 1 B Inflation in a financial environment means that the fall in the value of money of a period of time (Lumby, 2007). The rate of inflation can vary from time to time and from one country to another. The inflation presence means that the monetary interest rate which is the rate that is usually quoted. Although, inflation is not the cause of the time value of money, but it value would not be affected through the fisher effect relationship (Lumby, 2007). Inflation expected or unexpected presence
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Inflation United Kingdom Inflation Rate The inflation rate in the United Kingdom was recorded at 2.70 percent in December of 2012. Inflation Rate in the United Kingdom is reported by the UK Office for National Statistics. Historically, from 1989 until 2012, the United Kingdom Inflation Rate averaged 2.81 Percent reaching an all time high of 8.50 Percent in April of 1991 and a record low of 0.50 Percent in May of 2000. In the United Kingdom, the most important categories in the consumer price
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Macroeconomics Lecture 09 February 5, 2013 Inflation The CPI is Used to Measure the Rate of Inflation Becomes a problem when it is high & “out of control” The annual inflation rate is the percentage change in the consumer price index (CPI) from one year to the next. CPI2010 = 218.056 CPI2011 = 224.939 The inflation rate for 2011 = ((224.939 – 218.056) / 218.056) x 100% = 3.16% Your dollar lost 3.16% The higher the rate of inflation, the more quickly the U.S. $ loses its value in
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decrease M RISE IN AD Cost push inflation Rising costs independent of demand I Contraction of output (and employment) in response to higher costs I Import price shocks I Especially oil, cereal and metal shocks I Uncompetitive labour, unions I Inflationary Expectations Aim to boost AS over the long run I Investment in infrastructure & education I Incentives for innovation e.g. patents, tax breaks on R&D I Labour supply growth Demand pull inflation The AD-AS framework makes for clearer
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Inflation Introduction: Nowadays, more people pay their attentions on one word, “inflation”, because of the weak global economy. Inflation is when rising of general price level for goods and services happens with decreasing of purchasing power for people. In a short sentence, when inflation happens, people cannot use same amount of money to buy same amount of purchases as much as before. For finding out if inflation happens and what extent it has done, we always use CPI (Consumer Price Index)
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that the government budget deficit equal the sum of the change in the monetary base and the change in government bonds held by the public. Hyperinflation – an extreme inflation in which the inflation rate exceeds 50% per month. Inflation hedges – Alternative assets whose real returns are less affected than that of money when inflation varies Liquidity trap – a case of ultrasensitive of the demand for money to interest rates in which conventional monetary policy has no direct effect on aggregate spending
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recession has occurred. High unemployment decrease in sales, and minimal wages also occur creating a downward spiral. 1980-2010 list of recessions graphs for recession 1980-1982 The main cause of a recession is inflation, a general rise in prices of goods and services over a period of time whereas a smaller amount of goods are purchased with the same amount of money. This occurs in the economy for various reasons: increased production costs, more energy costs and
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The 1970’s was a dark decade in the United States of America, due primarily to the end of the Vietnam War and the golden age, and the arrival of new problems such as energy shortages (worldwide oil shortage), a high inflation rate, and a high unemployment rate. Inflation is caused by an increase in demand for something (for houses, cars…) and a decrease of its supply. The increase in the unemployment rate was due to the addition of women to the workforce as well as soldiers returning home after the
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What is Inflation? Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service. The value of a dollar does not stay constant when there is inflation. The value of a dollar is observed in terms of purchasing power, which is the real, tangible goods that money buy. When inflation goes up, there is a decline in the purchasing
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Theory In the economy inflation relates to the rise in the level of prices of goods and services during a period of time. When the prices of good rises in a market economy each unit of currency would buy fewer good and services than before. The power of inflation creates a decrease in the purchasing power of money. The inflation can be measure by the inflation rate the change in the price index during a period of time. Inflation can perceived as a negative or positive effect for the economy
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Nick Baker 9/18/2012 Macroeconomics Inflation is a Tax Inflation is how overall change in prices is measure. Inflation has been in effect in America since the beginning of its existence. Even though inflation measures the overall change in prices of a country, all money goes up with it. Workers salaries have gone up dramatically. More money has steadily gone into the economy as inflation rises. More money in the economy equals more inflation. A tax is a charge the government puts on items
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ECON 2301 NOTES 6/24 NOTES: If population goes faster, real GDP goes smaller. Less to go around, less standard of living. Real GDP can increase for two distinct reasons: 1. The economy might be returning to full employment in an expansion phase of the business cycle. 2. Potential GDP might be increasing. The return to full employment in an expansion phase of the business cycle isn’t economic growth. The expansion of potential GDP is real economic growth. **Rule of 70 states the number
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Inflation Rates CPI Inflation Info Dashboard Subscribe 10.49% (Sep 2013) 2.4% (Jun 2013) 1.1% (Sep 2013) 1.4% (Sep 2013) 1.09% (Sep 2013) 0.89% (Sep 2013) 0.9% (Sep 2013) 0.9% (Aug 2013) 1.4% (Sep 2013) 6.5% (Aug 2013) -0.1% (Sep 2013) 2.7% (Sep 2013) 1.518% (Aug 2013) How to calculate inflation rate Because inflation in simple terms is defined as the increase in prices or the purchasing power of money the most common way to calculate the inflation
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Unemployment or Inflation Wall Street Journal Assignment #1 Unemployment and inflation have an inverse relationship meaning that as one increases, the other decreases. According to the textbook, an ideal situation for the Federal Reserve would be to achieve both a low level of unemployment and a low level of inflation. After the 9/11 attacks in New York, the United States was put in a tragic financial crisis that led to the recession in 2008. While the debate for the causes of the 2008 recession
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Humber College Macroeconomics Group Project The Correlation Between Inflation & Unemployment Group 5 Members: Candace Crook, Michael Catalfamo, Melissa Faria, Krishna Lad, Kerri O’Hara, Stephanie Procenko & Brandon Vel Executive Summary Within this report data was collected and analyzed to determine whether inflation rates and unemployment rates had a negative correlation to one another. According to the theory, the more the Consumer Price Index rises, the lower unemployment rates will become
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Food Inflation Why 2013 will be a year of crisis? Paper # 3 ECON 403 References: 1. Michael. “Food Inflation, Food Shortages And Food Riots Are Coming”. thetruthwins.com. 6 Sept. 2012 < http://thetruthwins.com/archives/food-inflation-food-shortages-and-food-riots-are-coming> 2. David Frum. “Why 2013 will be a year of crisis”.cnn.com 3 Sept. 2012 < http://www.cnn.com/2012/09/03/opinion/frum-food-price-crisis/index.html> 3. Chris Mrtenson. “The U.S. Drought Is Hitting
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Economics WDB1004 Assignment, part: Inflation Inflation a. Explain what the article is about This article is about if Australian economy is still capable of achieving growth in excess of 3 per cent. The underlying measures of price growth rose to 0.9 per cent in the December quarter which, if sustained, would push inflation well over the top of the Reserve bank’s 2-3 per cent band. It explains that Australian economic growth is slow at this moment, 18 months of growth having been below trend
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| | | * FREE ENTERPRISE is where individuals are free to decide what to produce, how to produce it, and at what price to sell it. * A BUSINESS is any activity that seeks to provide goods and services to others while operating at a profit. * REVENUE is the total amount of money a business takes in during a given period by selling goods and services. * PROFIT is the amount a business earns above and beyond what it spends for salaries and other expenses. * A LOSS occurs when a business’s
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of the money supply c. the inflation rate b. the interest rate d. none of the above ANS: D 2. In the long run, the actual inflation rate depends primarily on: a. the expected inflation rate b. the Phillips curve trade-off c. the rate of growth of the quantity of money d. the unemployment rate ANS: C 3. The Phillips curve implies that the economy faces a: a. long-run trade-off between price inflation and the level of real wages b. short-run trade-off between inflation and unemployment c. short-run
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lower growth, higher unemployment and lower tax revenues. ECB should pursue monetary easing. Target a higher inflation rate, pursue quantitative easing. Give peripheral countries some monetary stimulus in face of all the deflationary pressures they face. The ECB have the wrong attitude to inflation. e.g. faced with prospect of double dip recession, they increased interest rates because inflation was temporarily above target. Supply side policies to improve competitiveness and efficiency. Important for
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Dillard’s Inc. Dillard’s is a retail department store that sales fashion apparel for men, women and children, they sale home goods, cosmetics and accessories of premium and private label brands. Dillard’s target of consumers are middle class and upper class people. This company operates retail stores and websites under brands like Guess, Polo Ralph Lauren, DKNY, and many more . Dillard’s primary customers are mostly women. In 2008, women apparel and accessories were 40 percent of total sales
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Siemens Energy, German government made a controversial decision to withdraw from nuclear energy in late 1990s as Siemens continues to conduct research in nuclear power (Rothaermel,2013). Economic: It is the factor that refers to the growth rate, inflation rate, exchange rate, labor costs, unemployment trends, interest rates, price fluctuate, economic recession and economic booming etc. For instance, the interest rate can affect the cost of capital for further extending the business, and the exchange
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output and a higher actual output level (but below new potential output) and an indeterminate change in inflation. If shift in aggregate demand is larger in magnitude we will have an increase in inflation, otherwise a decrease. Since change in inflation rate is indeterminate, so is the change in the real interest rate. 2. Suppose that there is a decline in both the unemployment rate and inflation. This could be caused by: a. A positive aggregate demand shock and a positive short-run aggregate supply
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News article titled as Eurozone unemployment hits record, inflation falls reports the latest Eurozone statistics released by Eurostat in 1st March, 2013. It indicates an ideal that unemployment rate soars while the inflation rate falls greatly. In another word, this article reflects one of significant principle of economic which is society faces a short-run trade-off between inflation and unemployment. Under the context of widely-affected debt crisis, article states that newly published official
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SWOT notes for inflation. 1) Identify a general price rise and an individual price rise? General Price rise in general price level. Individual price rise is a price rise for a specific product eg butter 2) Identify and define inflation, disinflation and deflation? Inflation-Inflation can be defined as a general increase in the price level of a nation over a period of time. An increase in the price of a particular good or service does not mean that inflation has occurred. Inflation means the average
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UK inflation rate down to 1.5% as food and petrol costs fall (measured by the consumer prices index) Food prices fell by 1.1% over the last year (steepest annual fall in more than 10 years) in part due to competition between supermarkets. Inflation slowed slightly to 1.5% in August from 1.6% the previous month. However core inflation, which doesn’t include food, alcohol, tobacco and energy, rose 1.9%. Falling inflation gives Bank Of England greater leeway as it targets inflation of 2% and
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done in the hope that businesses expand. Contractionary policy is used so there is a fall in output and prices and to alleviate inflationary pressure. The main macroeconomic objectives are to attain:- High and stable economic growth Low and stable inflation Low unemployment Balance of payments equilibrium b) The fiscal multiplier measures the change in output following a change in autonomous expenditure (the essential or basic amount of consumption plus investment. Small changes in the
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standardized coins as units of account. The amount of silver in the old world was scarce and the New world's expeditions created solutions by discovering rich silver mines; in places like Lima. The abundance of silver in Europe led to a unexpected inflation. Money was worth only what someone else would give in exchange for it. Over time, the financial innovation of credit arose, and sparked a major advancement to economic development. In episode 1, it states if credit and banks did not exist, the
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Discuss whether Inflation is always bad for the Economy Inflation is the sustained rise in the general price level. In this essay I will be discussing how inflation positively or negatively impacts the economy depends on a number of factors: Whether inflation is anticipated, Whether inflation is not anticipated, An individual persons situation, The cause of inflation. Inflation is an increase in prices we pay for goods and services. As inflation occurs it costs more for consumers to buy
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