Q.No 1- Inflation is a global Phenomenon which is associated with high price causes decline in the value for money. It exists when the amount of money in the country is in excess of the physical volume of goods and services. Explain the reasons for this monetary phenomenon. Inflation is commonly understood as a situation of substantial and rapid increase in the level of prices and consequent deterioration in the value of money over period of time. It refers to the advantage rise in the general level of prices and fall in the value of money. Inflation is upward movement in the average level of prices. Cause of Inflation 1. Demand Side increase in aggregative effective demand is responsible for inflation. In this case, aggregate demand …show more content…
This type of price discrimination is called perfect discrimination Discrimination of the Second Degree – In case of discrimination of second degree, the monopolist charges different prices for markets of the same commodity, but not at a maximum possible rate but at a lower rate. The monopolist will leave a certain amount of consumer’s surplus with the consumers. This is done to keep the consumers satisfied and prevent the entry of potentials rivals. This method is adopted by railway companies. Discrimination of the Third Degree – In case of discrimination of the third degree, the markets are divided into many sub-markets or Sub-groups. The price charged in each case roughly depends on the ability to pay of different subgroups in the market. This is the most common type of discrimination followed by a monopolist. Q.No-3 Define monopolistic competition and explain its characteristics It is a market structure in which a large number of small sellers sell differentiated products which are close, but not perfect substitutes for one another. Under this market, the products produced and sold are different, but they are close substitutes for one another. This leads to competition among different sellers. Thus, in this
Firstly Inflation is an upward movement in the average level of prices. Its opposite is deflation, a downward movement in the average level of prices. The boundary between inflation and deflation is price stability. Inflation can either be negative or positive; it could mean making products more expensive. There are a number of effects of inflation that can
The term `inflation' defines a situation in which prices are rising and the value of money is falling. The cause of inflation is due to too much money in the economy ben printed and the high rise in demand. too few goods. An inflationary spiral tends to set in. Increasing prices produce a demand for higher wages: higher wages mean that goods cost more to produce: prices must go up again to pay for the wage increases.
1. What is inflation? Inflation is an increase in prices for goods and services (What is Inflation?).
Demand-pull inflation happens when there is an extreme amount of demand for products and services. This is a result of an increase in the money supply by the central bank system. Consumers then have the ability to demand more of the products they want. Cost-push
Inflation is the sustained increase in the general level of prices for goods and services in a county, and is measured as an annual percentage change. (Investopedia) During periods of inflation, the prices of products and services will rise. There are several reasons why an economy would see a rise in inflation. Decrease in supplies, corporate deciding to charge more, and consumer confidence are some of the reasons why an economy would see the inflation rate increase. Consumer confidence is when consumers gain more confidence in spending due to a low unemployment rate and wages being stable. Decrease in supplies is when consumers are willing to pay more for a product or service is that is slowly becoming unavailable due to a decrease in supplies. Corporate decisions are when the corporations basically decide
In economics, with the inflation is a rise in the actual general level of prices of goods and services in an economy from over a period of time. When the general price level rise, such as each of the units currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power4 per unit of money. This therefore means that with the loss of real value in the medium of exchange and unit of account within the given and actual economy. With a chief measure for example and the price of inflation is within the given inflation rate, the annualised percentage change within a general price index over time in which is normally the consumer price index.
Inflation describes the increases in the average price and deflation is the decrease of the average price. Both inflation and deflation are the percentage rate that changes the price index and hurts the value of real money. Inflation is an increase in the general price of goods and services over a period of time. Unexpected inflation benefits the borrowers and hurts the lenders. Inflation is the reduction in purchase power. Inflation affects the value of money. Inflation or deflation is the percentage change of price index, once these calculations take effect we can use the (CPI) consumer price index and is widely used in the United States to level out price changes. Normal values are converted to real values by dividing the price index.
Inflation occurs when the general price level of goods and services have increased in a period of time. It is a measurement that signals the current economic situations and whether there is a potential economic growth.
Inflation is the generalized increase in cost of goods or services sold. Inflation causes a decrease in purchasing power. Purchasing power is how much can you get for your dollar. For example, with $1 I could buy 3 apples or I could buy 2/3 of a book. You get more purchasing power with the apples. With inflation you might for $1 get 2 apples and 1/3 of the book. Inflation is an indicator of a healthy economy.
3. Who would benefit from unanticipated inflation –lenders or borrowers? Why? Who would benefits from anticipated inflation –lenders, borrowers, or neither? Why?
Inflation is an increase of the currency of a country by issuing more printed money.
Demand pull inflation – This occurs when there is a high result of consumer demand. The prices increase for the same goods and services, when consumers are trying
When looking at the advantages and disadvantages of inflation, it is important to consider what type of inflation is occurring. For example,
Gorman L. (2008). "Discrimination". In Henderson D. R. (ed.). Concise Encyclopedia of Economics (2nd ed.). Indianapolis.
Inflation and Deflation, in economics, terms used to describe, respectively, a decline or an increase in the value of money, in relation to the goods and services it will buy. Inflation is the pervasive and sustained rise in the aggregate level of prices measured by an index of the cost of various goods and services. Repetitive price increases erode the purchasing power of money and other financial assets with fixed values, creating serious economic distortions and uncertainty. Inflation results when actual economic pressures and anticipation of future developments cause the demand for goods and services to exceed the supply