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
Discrimination is when an individual or group of people are treated more or less favorably than others.
1. What is inflation? Inflation is an increase in prices for goods and services (What is Inflation?).
According to the Federal Reserve Bank of San Francisco (2002), inflation can be defined as the increase in the level of prices and a decrease in the purchasing power of money. In short, money loses its value due to the increase of the prices of goods and services. Products that can experience this are food, clothing, electronics, raw materials, and more. The reasons for these occurrences are complex since there are two types of inflation, and each has its respective causes.
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.
3. Who would benefit from unanticipated inflation –lenders or borrowers? Why? Who would benefits from anticipated inflation –lenders, borrowers, or neither? Why?
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
Inflation is an increase of the currency of a country by issuing more printed money.
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
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.
Within these categories, many sub-markets branch out. Competitive Markers are the most common, having many sellers providing similar products to many buyers. Competitive businesses make profit based off of the relationship between net and gross income, and depend on providing a more reasonable price than its competitor. This type of market is seen mainly with a capitalist economy. Monopolistic Markets are similar to Competitive, but they differ in the type of product. Monopolistic businesses provide differing items that all provide a common service. A Monopolistic business gains profit by providing a product that the same basic service as another business, but differs in small details that contour to different types of buyers. The auto industry, proving scooters, motorcycles, automobiles, and other forms of differing transportation is an example.
By mid morning you have already gotten on the phone and begun to order tons of containers of ice cream to be delivered to your store by an express truck. Although throughout the day some people might get “sick” of waiting in line and will leave you keep serving those who stay. For the next week you keep waking up going to work and finding 3000 customers waiting to buy ice cream, and you think to yourself “Wow the ice cream business is booming.” Due to the high demand, increased expenses and the obvious ample supply of money in your community, you decide to raise the price for an ice cream. This increase in price is called inflation.
commodities increases such as milk, gas and bread. It is a rise in all prices simultaneously. Inflation is caused when the demand for something exceeds the supply. This causes the price of that particular item to go up which in turn causes wages to go up and operating costs also increase (inflation).
The phenomenon of inflation has been described in three different views: a) general view, b) Keynesian view and c) modern view. According to the general view it has been described as the increase in the price of goods and services but decrease in the value of the money. According to Keynes, it is the states when there is increase in the goods and prices as well as increase in the employment. The inflation is caused due to the increase in the expenditure that causing the shortage of the goods and
Gorman L. (2008). "Discrimination". In Henderson D. R. (ed.). Concise Encyclopedia of Economics (2nd ed.). Indianapolis.
There are different influences that cause inflation such as energy, food, commodities, and other goods and services. The entire economy is affected by rise of the cost of living. It also affects the cost of operating a business, borrowing money, mortgages, corporate and government bond yields, and every other aspect of the economy. There are several advantages of inflation in the economy. Some include moderate rates of inflation which allows prices to adjust. This is considered a sign of a healthy economy. With economic growth available we usually get a generous amount of inflation. Also moderate inflation rate reduces the actual value of debt. If there is a reduction, the real value of debt increase leads to a squeeze on usuable income.