Inflation rate

• Inflation One of the most critical aspects of the macro economy is the role inflation plays in determining price levels. Undoubtedly higher inflation will have a negative impact on the economy driving price levels higher then consumer wages are able to keep up with. However, if inflation is too low (below 2%, above 0) it will impede economic growth. The current inflation rate of .2% is a reflection of the anemic economic growth in the economy (U.S. Inflation Calculator). Inflation rates also…

because it involves the percentage change of exchange rates and the difference between the percentage changes in national price levels. The definition of relative purchasing power parity is, “the percentage change in the exchange rate between two currencies over any period equals the difference between the percentage changes in national price levels” (Krugman 416). This is important to economists because it allows them to examine change in exchange rates and the percentage changes in prices to…

opening four more new stores. However, three articles imply the concern about the economic slowdown and unstable economy environment in China. The central bank aims at cutting bank reserve requirement, using quantitative easing, and cutting interest rates to simulate the economy. Nevertheless, these stimuli may have side effects and backfires on the Chinese economy.…

there was an intervention in the exchange market, oriented to moderate the volatility of the exchange rates; this practice permitted the accumulation of considerable amounts that were an important support during the effects of the GFC. For the most part, the government of Alvaro Uribe took an appropriate step back and allowed to Colombian economy to correct itself; by 2010 the economic growth rate reached an impressive 4.3%, in comparison to other economies of the…

Introduction: When William Phillips first published his paper in 1958 on the relationship between inflation and unemployment, called the Phillips Curve, it became a base model for Central Banks globally to help set their monetary policies(Blanchard, 2010). However, in recent years, this inverse correlation between unemployment and inflation has seemed to vanish. As inflation expectations have anchored and unemployment has lowered, the Phillips Curve has flattened(Phillips Curve May Be Broken,…

A CASE OF CLASSICAL AND KEYNESIAN MODELS 2 A Case of Classical and Keynesian Models, Unemployment and New Developments In this essay we would try to elaborate on the macroeconomic ideas arising out of classical and Keynesian schools of thought and how each thought-process in similar and, at the same time, different from each other. We would also describe how both though-processes try to address the problem of unemployment facing an…

1.Monetary policy refers to the decisions made about interest rates and the supply of money. In New Zealand the Reserve bank is independently responsible for monetary policy to prevent usage and sway from political purposes. Price stability prevents good or services from getting rapidly more expensive (inflation) or rapidly decreasing in value (deflation) .Price stability is currently defined as “keeping the rate of inflation between 1-3 percent on average over the median term.” This is called…

of economic production and growth. A significant change in GDP generally has an effect on the stock market. Investors worry about negative growth which is one of the factors that economist use to determine whether an economy is in recession. Inflation is the average level of prices increasing and deflation…

than 0.1 percent. Minimum wage raises pose no inflationary threat. The potential minimum wage’s effect on inflation would be raise the rate of inflation by less than 0.1 percent. This would raise the average annual inflation rate of about 2.6 percent to just about 2.7 percent. This change is so minuscule that the rate is effectively unchanged by the wage increase. The potential impact on inflation that this poses is smaller than the margin of error for the Department of Labor’s estimate of…

In 2004, Japan still maintains its rank as No.1 of Human Development Index in the world for life expectancy at birth . Japanese government should find a way to increase the growth of population, otherwise the ageing population will cause decrease in productivity. This is because ageing people tend to be less productive and consumptive compare to productive age (between sixteen to fifty five years old). To encourage the population growth, the government should give awards for every citizen who…