If you bought a house for $150,000 with an annual inflation rate of 4 percent, it would take about 18 years for the house’s worth to double based on the Rule of 72.
b. If you bought a Picasso painting at last week 's auction for $200,000 and the annual inflation rate is 10 percent, how long would it take to double your money? If you bought a painting by Picasso for $200,000 with an annual inflation rate of 10 percent, it would take around 7 years for the painting’s worth to double.
c. If you went to the car show and bought a 1965 Mustang in mint condition for $25,000 and the annual inflation rate was 8 percent, when would your investment double? If you bought a 1965 Mustang for $25,000 with an annual inflation rate of 8 percent, it would take around 9 years for the car’s worth to double based on the Rule of 72.
d. If your grandmother gave you her wedding ring, it was appraised at $1,200, and the annual inflation rate was 6 percent, how many years would it be before it was worth $2,400? If your grandmother gave you her wedding ring, which was appraised at $1,200 and it had an annual inflation rate of 6 percent; it would take about 12 years for the ring’s worth to become $2,400.
e. If you bought an antique lamp for $3,000 and the inflation rate was 3 percent, how many years would it be before your investment doubled in value? If I were to buy an antique lamp for $3,000 with an annual inflation rate of 3 percent, it would take around 24 years for the lamp’s worth to double. 2. Reflect on how inflation, recession and depression affects you? Your family? The general population? Explain your thoughts in a short paragraph (5-7 sentences). During times of inflation, recession, and depression every individual is affected in some way. Common between all three types of economic decline is the common problem of unemployment. Individuals across the nation are set on edge as news reports take center stage while trying to stay afloat. Meanwhile, individuals that suffer from unemployment during these times often feel depressed, alone, afraid, and helpless. Unemployment and pay reductions also lead to a decline in health, an increase in “sinful habits” such as alcoholism, family troubles, and an increase in homelessness. Leaving many individuals to ride out these times in hopes that it ends quickly. Another recession or depression would also affect me personally as I am growing older and moving into the working force. However, for right now I am enjoying the safety of living with my Dad, who due to the stability of his job; remains safe. 3. Who are the winners in during times of high inflation? In times of recession? In times of depression? Provide specific examples to support your answer. When we think of times of high inflation, recession, or depression we assume that everybody (for the most part) suffers at least to some extent; and yet somehow there are some people/businesses that actually remain stable or even thrive. During times of high inflation when prices rise and there is a decrease in the purchasing value of money, anyone in debt comes out ahead. This is because inflation devalues any and all debt; therefor it is advised that any individual/business in debt should pay it off during these times while the amount/cost of their debt is cut in half. Inflation also stimulates investors since during times of inflation they can buy stock, paintings, gold, or real-estate (anything valuable) at a lower cost and then make a large profit on it once the economy has stabilized. A recession however, is a temporary economic decline where prices increase too much causing consumers to stop purchasing goods ultimately leading to a dramatic drop in …show more content…
While people who are in debt come out ahead during times of inflation, banks and individuals living on a fixed income lose greatly. As the value of money decreases, banks that are collecting debt come out on the losing side since their money has lost nearly half its original value. Individuals living on a fixed income (such as retirement) also face similar issues as their once sustainable income has now lost its value. This resulted in people being forced to move, having to make cutbacks, and sometimes becoming
b. If you bought a Picasso painting at last week 's auction for $200,000 and the annual inflation rate is 10 percent, how long would it take to double your money? If you bought a painting by Picasso for $200,000 with an annual inflation rate of 10 percent, it would take around 7 years for the painting’s worth to double.
c. If you went to the car show and bought a 1965 Mustang in mint condition for $25,000 and the annual inflation rate was 8 percent, when would your investment double? If you bought a 1965 Mustang for $25,000 with an annual inflation rate of 8 percent, it would take around 9 years for the car’s worth to double based on the Rule of 72.
d. If your grandmother gave you her wedding ring, it was appraised at $1,200, and the annual inflation rate was 6 percent, how many years would it be before it was worth $2,400? If your grandmother gave you her wedding ring, which was appraised at $1,200 and it had an annual inflation rate of 6 percent; it would take about 12 years for the ring’s worth to become $2,400.
e. If you bought an antique lamp for $3,000 and the inflation rate was 3 percent, how many years would it be before your investment doubled in value? If I were to buy an antique lamp for $3,000 with an annual inflation rate of 3 percent, it would take around 24 years for the lamp’s worth to double. 2. Reflect on how inflation, recession and depression affects you? Your family? The general population? Explain your thoughts in a short paragraph (5-7 sentences). During times of inflation, recession, and depression every individual is affected in some way. Common between all three types of economic decline is the common problem of unemployment. Individuals across the nation are set on edge as news reports take center stage while trying to stay afloat. Meanwhile, individuals that suffer from unemployment during these times often feel depressed, alone, afraid, and helpless. Unemployment and pay reductions also lead to a decline in health, an increase in “sinful habits” such as alcoholism, family troubles, and an increase in homelessness. Leaving many individuals to ride out these times in hopes that it ends quickly. Another recession or depression would also affect me personally as I am growing older and moving into the working force. However, for right now I am enjoying the safety of living with my Dad, who due to the stability of his job; remains safe. 3. Who are the winners in during times of high inflation? In times of recession? In times of depression? Provide specific examples to support your answer. When we think of times of high inflation, recession, or depression we assume that everybody (for the most part) suffers at least to some extent; and yet somehow there are some people/businesses that actually remain stable or even thrive. During times of high inflation when prices rise and there is a decrease in the purchasing value of money, anyone in debt comes out ahead. This is because inflation devalues any and all debt; therefor it is advised that any individual/business in debt should pay it off during these times while the amount/cost of their debt is cut in half. Inflation also stimulates investors since during times of inflation they can buy stock, paintings, gold, or real-estate (anything valuable) at a lower cost and then make a large profit on it once the economy has stabilized. A recession however, is a temporary economic decline where prices increase too much causing consumers to stop purchasing goods ultimately leading to a dramatic drop in …show more content…
While people who are in debt come out ahead during times of inflation, banks and individuals living on a fixed income lose greatly. As the value of money decreases, banks that are collecting debt come out on the losing side since their money has lost nearly half its original value. Individuals living on a fixed income (such as retirement) also face similar issues as their once sustainable income has now lost its value. This resulted in people being forced to move, having to make cutbacks, and sometimes becoming