Inflation In Simple Words

Rising inflation
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High inflation is the major internal obstacle that constrains economic growth of Vietnam. Inflation should be kept in check and the budget deficit must be reduced to an acceptable level. Furthermore, in the future years, it will be needed to closely follow changes in production and prices in order not to over-stimulate the economy by means of an easing of financial policies, which might stimulate inflation. 3. Human resource policy With purpose to encourage foreign direct investment in the long…...
Inflation Targeting
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Inflation Targeting Emerging economies include those regions which are experiencing rapid industrialization. As such emerging markets comprises of the economies with greater prospects of rapid economic growth as compared to other developing economies. There are different policies which have resulted into such rapid growth of emerging markets and inflation targeting is one such approach. Inflation targeting is now considered as a regular phenomenon in emerging economies as many countries are adopting such an approach of handling the issue of inflation.…...
Hyperinflation in Zimbabwe
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Hyperinflation/Inflation in Zimbabwe Imagine traveling to your local food market located in the metropolis of Harare, Zimbabwe in the twelvemonth of 2008. You decide to buy a gallon of milk, merely to detect that it costs about $ 24 billion Zimbabwe dollars. As you to the other aisles to pick up the remainder of your food markets, you besides realize that a loaf of staff of life cost $ 600 million while a 2 litre bottle of cooking oil cost…...
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German Hyperinflation
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One of the most interesting and devastating phenomena to take place in a country was during the post World War I German Hyperinflation from 1918 – 1923. Germany had lost the war and the Allies were forcing them to make reparations. “The central government in Germany, which did not impose income taxes, financed the war almost completely by issuing debt” (Hetzel, 2). Since Germany refused to impose high taxes on their people, they had to pay for the war and…...
Discuss the role of government policy in reducing unemployment and inflation
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One of the main responsibilities of governments is to create a stable economic and political environment in the country. Majorly governments seek to achieve a stable rate of inflation and low level of unemployment. To accomplish this governments tend to use variety of policies and strategies according to their mission. They might choose to follow interventionist policies by controlling the market with fiscal or monetary policies or they might just let the Central Bank to allocate required changes. Central Banks…...
Automatic Stabilizers to Combat Inflation
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A paper which studies how automatic stabilizers are used to combat inflation How are Automatic Stabilizers Used to Combat Inflation? In today's economy, there are devices present called automatic stabilizers. Automatic stabilizers, are mechanisms which aid in the correction of an economic problem without the interference of anyone or anything. They are perhaps most useful to combat demand - pull inflation. Demand - pull inflation, is when prices rise because the economy cannot produce enough goods to satiate the economy.…...
Inflation affects on the growth of the country
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ABSTRACT Inflation is an issue which hides the growth of the country. It effects the living of the people of the country. The responsibility to protect the change in livingstandard of the people by inflation goes to economists, politicians and to government. The standard of living changes because of change in purchasingpower of people which effect their savings. In food items inflation is specially higher. Through this paper we analyse the inflation of our country that occured in past. INTRODUCTION…...
The Inflation of the Filipino People
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"By a continuing process of inflation,government can confiscate, secretely and unobserved, an important part of the wealth of their citizens" (John Maynard Keynes) Can the philippines handle too much people? What could go wrong if we can't handle all the people in Philippines? Why is it so traffic in edsa, rizal, taft quezon avenue? What is the reason why filipino people wanted to have a family when they cannot support their children? Why do people deforestation in land areas and…...
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"Official" unemployment refers to the number of civilian workers who are actively looking for work and not currently receiving wages. Given that official unemployment statistics specifically exclude those who would like to work but have become discouraged and ceased looking for employment, the true unemployment rate is always higher than the official rate.In particular, the Phillips curve highlights why this is so. Generally there is a relationship between inflation and unemployment, the lower the rate of unemployment, the higher the…...
The Problem of Grade Inflation
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Grade Inflation: Is A the new C?Quinn, my 9-year-old stepson played on a little league baseball team. He attended most of the practices and played in all the games. I asked one day who won the game today? He looked to his father for the answer. I asked, “doesn’t he know if his team won?” It seems that this little league bent the rules of baseball. Well, they didn’t just bend the rules they made up their own rules –…...
Effects of Inflation
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Keeping Inflation under control is a primary concern for the Australian Government as it affects so many different parts of the Economy, including Economic growth, standard of living and unemployment. There are three types of inflation, depending on their causes. Firstly, demand pull inflation occurs when there is an excessive aggregate demand at or near full employment. If aggregate demand exceeds aggregate supply, prices of g’n’s rise as a rationing mechanism. This form of inflation is usually associated with periods…...
Phillips Curve: Inflation and Unemployment
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The macro economic environment is subject to fluctuation in its key variables such as rate of inflation, economic growth, levels of employment, exchange rate, trade cycles and balance of payments. Economists feel that some of these variations interact and a change in one affects the other. One unique interaction has been between unemployment rate and economic growth and the resultant rate of inflation. Unemployment rate includes those willing and able to take up work but are not able to find…...
Causes of Inflation
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A sustained rise in the prices of commodities that leads to a fall in the purchasing power of a nation is called inflation. Although inflation is part of the normal economic phenomena of any country, any increase in inflation above a predetermined level is a cause of concern. High levels of inflation distort economic performance, making it mandatory to identify the causing factors. Several internal and external factors, such as the printing of more money by the government, a rise…...
How Inflation Affects Function of Money
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Inflation is defined as a persistent increase in general price level. Inflation is measured by the proportional changes over time in some appropriate price index, commonly a consumer price index. General Price level refers to an average of all price in an economy and changes in reflect in the cost of living. Inflation however affects many thing one being function of money such as medium of exchange, store of value, unit of account and standard of deferred payments. Medium of…...
Inflation Rate of New Zeland
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Issuing debt in New Zealand is not necessary a nonstarter. Although it has a required coupon rate as high as 18.55%, the inflation rate has been floating freely and thus causing the CPI surprisingly high. Therefore, the purchasing power parity is proportional compare to the one in the United States or in Swiss. When paying out coupon, the high inflation rate has offset the high coupon rate. The cost of debt of New Zealand in its own currency is 4.6%…...
Impact of Inflation on Common Man
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* The banking industry produces some of the most lucrative profit margins around. If you are interested in starting your own bank then you need to be prepared for the fund-raising, organizing and form filing required to set one up. These steps will help make the process easier * Evaluate how practical it is for you to start a bank. Look at your business experience. You will need to have business management skills, financial management skills and fund-raising skills. *…...
Inflation in Bangladesh
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1. Introduction Inflation is a general increase in prices and fall in the purchasing value of money. “Too much money in circulation causes the money to lose value”-this is the true meaning of inflation. What is Inflation. The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to…...
Major causes of inflation in Zimbabwe
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Introduction Inflation can be described as a tendency for the general price level to increase over a given time [] period. It can also be viewed as a case where too much money [] is chasing few goods. Inflation is usually measured by the Consumer Price Index (CPI) where a representative basket of consumer goods is analysed for changes in the price level over a defined time [] frame. Generally, inflation results from demand pull, cost push and imported inflation.…...
Effects of Inflation: Case of Kenya
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INFLATION Inflation is a term that refers to a persistent increase in general price levels of goods and services over a given period of time. The rise in inflation is mainly attributed to rise in food and fuel costs which results in a sharp rise in the prices of goods and services in the local market. MEASURING INFLATION Consumer Price Indices Inflation rate is calculated as the rate of change in consumer price indices from one period to another. Periods…...
Capital investment analysis and inflation and capital investment analysis with taxation
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Inflation refers to persistent increase in price of goods and services. It is also referred to as average general increases in the price of goods and services. Prior to this time, there had been lots of argument amongst writers in finance on whether or not to ignore or include inflation when computing capital budgeting. The argument has always being that inflation affects both the discount rate and the cash flow hence the effect will always cancel out. During inflation shareholders…...
How inflation affects the functions of money?
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Inflation mentions a continual basic increase in the prices of products and services. Simply put, it indicates an increase in the level of cost of living. Cash is anything that is generally appropriate by the society for the exchange of goods and services. There are various functions of money such as: To function as a legal tender-- Money is used to trade in items and services both internally and externally. In this method cash relieves the exchange of products within…...
Analyse the effects of inflation on an economy
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Inflation impacts on many facets of the economy, these impacts can be both long and short term. It is generally the case that higher levels of inflation carry more severe consequences thus it is often the aim of government to sustain a low level of inflation. Inflation effects economic growth and certainty, wages, unemployment, international competitiveness, exchange and interest rates amongst other things. High inflation can be a major constraint on economic growth and certainty which ultimately impacts upon international…...
Relationship between Inflation and Interest Rate
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Interest and inflation are key to investing decisions, since they have a direct impact on the investment yield. When prices rise, the same unit of a currency is able to buy less. A sustained deterioration in the purchasing power of money is called inflation. Investors aim to preserve the value of their money by opting for investments that generate yields higher than the rate of inflation. In most developed economies, banks try to keep the interest rates on savings accounts…...
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FAQ about Inflation In Simple Words

How Inflation Affects Function of Money

...That is, the seller also needs to be compensated for the loss of value resulting from higher prices. Alternatively, a negative inflation rate (anything less than zero) means that the interest rate is less than 10 percent. A 5 percent annual inflation...

How inflation affects the functions of money?

...Thus this function of money encourages consumptions by households. Inflation adversely affects the function of money. With higher prices, money loses its value thus it can no longer act as a medium of exchange. The transactionary demand for money fal...
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