Inflation

This week 7 episode was about “Inflation and Bubbles and Tulips” and how these things affect us in our daily lives. Inflation is when people have a lot of money and bid off for things also known as Demand Pull inflation, another cause of inflation is when producers raising prices and producing less because of an increase in production cost.The global rise in home prices the biggest bubble in history when each person is betting that they can sell at a higher price but you run out of buyers and…

particular, Trump plans on utilizing expansionary fiscal policy by cutting taxes and increasing government spending. d. Irwin worries this policy will result in a larger budget deficit for the country. e. This policy may bring about some needed inflation. f. The main worry many economists seem to have about Trump’s policies is that the economic growth it…

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…

higher than the averaged inflation rate. This make sense as for real profit from bond would be the taking away the inflation rate from the bond rate. If the bond rate is lower or the same magnitude as inflation rate, then there would be no profit and perhaps even a loss. The real bond profit decreases as the years pass. This is due to the reduction in the bond rate as the inflation rate does not fluctuates much after year 1992. The averaged bond rate and averaged inflation rate were than plotted…

The pick-up in growth has been mostly driven by private consumption, spurred by tax cuts, significant hikes in both public and private wages, and low rates of inflation. GDP is forecast to grow by 5.7% in 2017, 4.4% in 2018, and 4.1% in 2019. Private consumption is projected to decelerate in 2018, as inflation increasingly weighs on real disposable income, but is expected to continue acting as the main growth driver. However from 2017 onwards, the country went into -1.2 recessions…

As I suggested previously, Phillips Curve emphasizes the modification of the unemployment rate and its influence on the price inflation. It also impacts on the labor demand because of the government increased spending. Nash also advocates for an accurate fall of unemployment pool. Consequently the corporations or businesses contend for smaller number of workers by uplifting ostensible remuneration. Added to that, employees have better agreement options to demand an increase in nominal wages…

There are many different variables within an economy that could affect the exchange rates, interest rate and inflation rates. All of these things then have an effect on unemployment rates, net exports and imports and foreign exchange rates. When looking to travel the world, it is important to look at foreign exchange rates to see if you have sufficient funds available to get into countries and exchange your currency for theirs. Economies that have high interest rates that are left unchecked can…

A high inflation rate erodes the purchasing power and creates uncertainty for estimating future costs. However, an moderate increase in the supply of money - with controlling over inflation rate - will result in: First, lowering interest rate, which mostly spurs investment and an incentive for borrowing more loans. Second, putting extra money in consumers’…

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 the Policy targets agreement which is set by the minister of finance and the Governor of the reserve bank.…

When inflation rises interest rates go up, which makes it a little more expensive to borrow money, this will not affect anybody who already has a fixed rate mortgage, or if you have a car loan, but if you do get a car loan tomorrow it will be a bit higher due to the rise of inflation. Consumers also spend less money when interest rates are up, when more people spend less money the economy slows down and inflation starts to decrease. There is expected to be a rise in wage growth and inflation due…