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Inflation is a widely discussed topic because it has a huge effect on our economy. In fact, we can see the effect inflation has on our economy when we compare the prices of goods and services over the last fifty years. Inflation is when money loses its value over time, which results in an increase in the average level of prices. It is the opposite of deflation, which is a decrease in average prices. The study of inflation provides foundations to understanding the implications on currency exchange works and the stock market. Inflation is measured by the Consumer Price Index (CPI), which compares the price of a specific basket of goods from one year to another. A base year is selected for the calculation where the CPI for that year is 100 and all other years will be indexed accordingly. By looking at the index we get a better idea of the purchasing power we lose over time with the same nominal value of money.

Within the topic inflation important questions include: What level of inflation is acceptable? What policies should be implemented to prevent too high or too low inflation? What is the relationship between inflation and unemployment in reference to the Phillips Curve? Is inflation caused by changes in the interest rate or vice versa? How does inflation relate to the demand for money?

Sharp rise in oil prices, which sends the price of gasoline

You are a member of the Federal Reserve Board. "There is a sharp rise in oil prices, which sends the price of gasoline to $5 per gallon, increasing the inflation rate, and sending the economy into recession."Given the following scenario, what would be your recommendations to stabilize the economy? Explain. Describe what would be

The US Economy in 2009 and Today

Please help with the following problem: In terms of inflation, interest rates and unemployment, what is the current economic situation in America as compared to five years ago? Please provide academic reference to support the response.

The Philips Curve

Suppose the economy has been experiencing zero inflation and five percent unemployment for several years. The government decides to lower the unemployment percentage by generating some inflation. You need to do the following: 1. Using the Grapher tool, create a graph showing what the short-run effects would be and what would

Targeting-Inflation or Interest Rates

Targeting When looking at targets, you will find that this is very important for economies to evaluate. If the Fed was to conduct targets, it will make their job a little bit more transparent. How effective would their policies to help stabilize our economy? Inflation or Interest Rates When looking at the Fed, you wil

Unemployment and the Current Rate of Inflation

What is the current rate of unemployment and the current rate of inflation? Make sure you provide the source of your information. What is the president doing to help us in our current economic crisis? Do you agree/disagree with his proposals? Why? Check out this website: What are you

Nominal and Real Amounts

This is an important notion in economics which infuses several concepts dealing with money. We have "nominal" quantities and "real" quantities. For example, one would talk about the nominal price of a house as opposed to real price of the same house. Or one might talk about nominal deficit as opposed to real deficit. What's the

Calculate the rate of return and future value in current dollars.

1. A man bought a 5% tax-free municipal bond. It cost $1000 and will pay $50 interest each year for 20 years. At maturity the bond returns the original $1000. There is 2% annual inflation. what real rate of interest will the investor receive? 1. What rate of return will the investor receive after the effect of inflation has bee

Real Cash Flows: PV of Mr. Art Deco's Payment

Mr. Art Deco will be paid $100,000 one year hence. This is a nominal flow, which he discounts at an 8% nominal discount rate: PV = 100,000/1.08 = $92,593 The inflation rate is 4%. Calculate the PV of Mr. Deco's payment using the equivalent real cash flow and real discount rate.

Current Event Article Evaluation

I need help evaluating the article below. The analysis should be at least 250 words. I must cite the article in APA style.

What is the effect of an increase in the quantity of money?

Please help answer the following questions. Provide at least 200 words in the solution as well as references to go along with the solution. What is the effect of an increase in the quantity of money? What is the difference between real variables and nominal variables? Are these variables affected by the quantity of money? If

Macroeconomic analysis concerns

I understand that there are three primary concerns in macroeconomics analysis that include: inflation, output growth and unemployment. The only thing I do not understand is the motivation behind these concerns. Can you explain please?

Real vs. Nominal Interest Rates

Please provide help with this assignment: You observe that the current interest rate on short-term U. S. Treasury bills is 4.76 percent. You also read in the newspaper that the Gross Domestic Product (GDP) deflator, which is a common macroeconomic indicator used by market analysts to gauge the inflation rate, currently implie

Following are examples of typical economic decisions made by the managers of a firm. Determine whether each is an example of what, how or for whom. a- Should a company make its own spare parts or buy them from an outside vendor ? b- Should the company continue to service the equipment that it sells or ask customers to use independent repair companies? c- Should a company expand it's business to international markets or concentrate on the domestic market? d-Should the company replace it's own communications network with a virtual private network that is owned or operated by another company? e- Should the company buy or lease the fleet of trucks that it uses to transport it's products to market? 2- Because of inflation, a company must replace one of it's (fully depreciated ) machines at twice the nominal price paid for a similar machine eight years ago. Based on present accounting rules , will the company have covered the entire cost of the new machine through depreciation charges? Explain by contrasting accounting and economic costs. 3- You have a choice of opening your own business or being employed by someone else in a similar type of business. What are some of the considerations in term of opportunity costs that you would have to include in arriving at your decision?

1- Following are examples of typical economic decisions made by the managers of a firm. Determine whether each is an example of what, how or for whom. a- Should a company make its own spare parts or buy them from an outside vendor ? b- Should the company continue to service the equipment that it sells or ask customers t

Solving: Problems Regarding Inflation and Unemployment

1. Assume the following data for a country: total population, 500; population under 16 years of age or institutionalized, 120; not in labor force, 150; unemployed, 23; part time workers looking for full time jobs, 10. What is the size of the labor force? What is the official unemployment rate? 3. If the CPI was 110 last year

CPI Analysis

If the CPI was 110 last year and is 121 this year, what is this year's rate of inflation? In contrast, suppose that the CPI was 110 last year and is 108 this year. What is this year's rate of inflation? What term do economists use to describe this second outcome?

business cycles

Why does capitalism have business cycles and what is our business cycle today?. Why would you suppose that the FED and the US Government to target these two percentages? What is the percentage rate of Full Employment and Inflation that that these two organizations try to keep as its target?

Assess demand-pull.

Some events occur and the economy experiences a demand-pull inflation. a. List the events that might cause demand-­pull inflation. b. Describe the initial effects of a demand-pull inflation. c. Describe what happens as a demand-pull inflation spiral proceeds. Figure attached**

Monetary policy

How does a change in monetary policy on the part of the Fed impact nominal interest rates, the consumer price index, and inflation rates? How are the current real stock of money in the US and real interest rates computed?


1.Explain the various types of inflation and its consequences. 2.Describe the difference between inflationary gap and deflationary gap.

How the Fed uses the Money Multiplier to fight inflation

Why do you think the Fed evaluates the money multiplier when making decisions with regard to the money supply? What function does the money supply serve in our economy to influence certain economic variables? Why does the Fed like to fight inflation in our economy and is inflation a concern right now given our current economic s

Sustainable primary surplus/deficit

A.Calculate the sustainable primary surplus/deficit for each country and identify which countries (if any) have a potential debt crisis on their hands. b. For any countries with an unsustainable debt path identify possible changes that could bring the country back to sustainability. Country debt/gdp Primary balance N

Gross Domestic Product

GDP is a less than perfect measure of economic well-being. It may be faulted for each of these practices EXCEPT that it: does not take leisure time into account. involves multiple counting. does not take psychic costs into account. does not take psychic income into account. Net dome

Nominal vs. Real GDP

Consumer Price Index (pound of corn) Year Current Price Base Year Price Price Index 2006 $1.00 $1.00 100 2007 $1.25 A 125 2008 $1.34

Economic Princples

Please explain in detail to improve my understanding of these questions. 23-4 Why is there a trade off between the amount of consumption that they can enjoy today and the amount of consumption that they can enjoy in the future? Why cant people enjoy more of both? How does saving relate to investment and thuus to economic g