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ALL ECONOMICS DISCUSSION, PAPERS HELP HERE!!

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darknite12394:
cud sum1 help me with this question ???

Explain how individual's earning might change over time?

Freaked12:

--- Quote from: aangel42 on June 08, 2010, 04:26:16 pm ---How might inflation affect a person’s spending, saving and borrowing?

--- End quote ---
http://en.wikipedia.org/wiki/Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. 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.
http://everything2.com/title/The+effects+of+inflation
Inflation is viewed as being undesirable because of some serious economic and social effects. Inflation impacts on income distribution making an random redistribution of real income. Those receiving fixed money incomes (e.g., pensioners, beneficiaries etc.) are usually disadvantaged because often their incomes are not adjusted upwards fast enough to compensate for the effects of continually rising prices. Their real incomes (i.e., the goods and services their incomes will buy) will fall. Individuals whose incomes rise more rapidly than the inflation rate will experience increasing real incomes. Generally, the pattern of income distribution tends to become more unequal than it was before inflation. If the rate of inflation is high, individuals with money tend to buy real assets such as property, gold and antiques, which often increase in value faster than the rate of inflation. This group will gain by increasing the size of their share of the nation's wealth.

There is more to this.But this gives a foundation

Inflation tends to increase spending and encourage borrowing at the expense of savings. If prices are rising quicker than incomes, individuals will tend to buy at current prices before goods and services become more expensive and less affordable. Some consumers may buy using higher levels of debt (i.e., borrowing) than otherwise might the case. Savings may be discouraged because with high inflation when the money saved is repaid, it can be worth much less than when it was lent and the real rate of interest may be low. The real rate of interest rates fail to keep pace with inflation the saver loses purchasing power, i.e., their ability to buy things falls. Rising prices are a boon to borrowers because the repayment of interest and the sum borrowed (i.e., the principal) is with lower valued money. Inflation reduces the real value of the amount they owe, as the sum repaid has less purchasing power. Of course, any gain by borrowers must be weighed against the interest they must pay.

rhea:
hey imported inflation is a sub category of cost push infl. right?
and monetary infl. is a sub category of demand pull infl>

then do we mentiion them separately, if its for 8 marks suppose?
if so, how do we distinguish?

rhea:
annyybboooddyyyy??!!

Freaked12:

--- Quote from: rhea on June 08, 2010, 04:42:43 pm ---hey imported inflation is a sub category of cost push infl. right?
and monetary infl. is a sub category of demand pull infl>

then do we mentiion them separately, if its for 8 marks suppose?
if so, how do we distinguish?

--- End quote ---

Why are you going into so much detail
There are many causes for inflation, depending on a number of factors. For example, inflationcan happen when governments print an excess of money to deal with a crisis. As a result, prices end up rising at an extremely high speed to keep up with the currency surplus. This is called the demand-pull, in which prices are forced upwards because of a high demand.
Another common cause of inflation is a rise in production costs, which leads to an increase in the price of the final product. For example, if raw materials increase in price, this leads to the cost of production increasing, which in turn leads to the company increasing prices to maintain steady profits. Rising labor costs can also lead to inflation. As workers demand wage increases, companies usually chose to pass on those costs to their customers.

Inflation can also be caused by international lending and national debts. As nations borrow money, they have to deal with interests, which in the end cause prices to rise as a way of keeping up with their debts. A deep drop of the exchange rate can also result in inflation, as governments will have to deal with differences in the import/export level.

Finally, inflation can be caused by federal taxes put on consumer products such as cigarettes or fuel. As the taxes rise, suppliers often pass on the burden to the consumer; the catch, however, is that once prices have increased, they rarely go back, even if the taxes are later reduced. Wars are often cause for inflation, as governments must both recoup the money spent and repay the funds borrowed from the central bank. War often affects everything from international trading to labor costs to product demand, so in the end it always produces a rise in prices.

 

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