Tuesday, May 25, 2010

Inflation (important thing we've learned)


Inflation- It's an increase in average price levels
effect of inflation is to decrease the purchasing power!



There 2 types of inflation-
Demand pull- increase in demand, causes increse in prices. "more dollars chasing fewer goods"
Cost push- Increase cost of production force business to nicrease the price they sell goods and services at.

How is it measured?? Consumer price index.  The gov establishes a dollar value, point total of a market baset of goods and services that consumers have purchases recently. 

Who is helped by inflation??
  • People who owe money
  • People who make more money and receive COLAS
  • People who can anticipate inflation

Debate on if inflation is good or bad!
read this and it explains pros and cons

video on inflation

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