Inflation

Inflation PowerPoint PPT Presentation


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. Objectives. What is inflation?How is inflation measured?What causes inflation?What are the effects of inflation?. Question. What causes prices to go up and down?. Inflation:. The average of all prices is called the price level.. An INCREASE in the price level (average level of prices). How

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Inflation

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1. Inflation Chapter 13 Section 1

2. Objectives What is inflation? How is inflation measured? What causes inflation? What are the effects of inflation?

3. Question What causes prices to go up and down?

11. Velocity:

12. The Exchange Equation

16. The Effects of Inflation Individuals on Fixed Incomes Income stays the same, but prices go up. Savers (saving accounts) If inflation rate surpasses interest rate, you suffer a decrease in buying power.

17. Past Decisions Costly mistakes in bidding contracts Hedging against Inflation We use resources to hedge against inflation when we could be using them to increase productivity.

18. Assessment What is inflation? How is inflation measured? What causes inflation? What are the effects of inflation?

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