Inflation - Research Paper Example

Comments (1) Cite this document
The reason inflation is so influential is because inflation affects the purchasing power of money. For example if a person is able to purchase $1 of goods today and a year later the national inflation rate is 10% that person would only be able to purchase 90% of the goods a year later with a $1. …
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.1% of users find it useful
Read TextPreview

Extract of sample

The effect of inflation is that it makes your money be worth less. Inflation affects more poor people because this group of individuals has limited resources.
Inflation affects the consumer markets as well as the money markets. The money market is where the government sells treasury stocks and bonds and where corporations sell corporate bonds. The interest rate influences the money markets because when interest goes up companies are forced to offer higher bond coupons rates in order to attract investors. The bonds of corporations are rated by agencies such as Moody’s. Take for example a company that sells bonds. The company is offering bonds that pay 8%. The inflation rate of the nation is 5%. The investor gets a net return of 3% after deducting inflation from the coupon rate. Suddenly the interest rate of the nation goes up to 9%. Based on those circumstances the corporation cannot sell bonds at 8% because nobody would buy them since the bonds have a net loss of 1% after inflation is deducted.
The inflation rate in a country affects the amount of interest that people earn in their savings and checking accounts. When inflation goes up banks are forced to pay higher interest rates to provide value to their customers. Different age demographics are affected more than others by inflation. The elderly are affected a lot by inflation. The reason that the elderly get hurt more than others is because most pension funds pay fixed payments. If a person gets a $600 for the rest of their lives as time passes that pension become less valuable because inflation is deducing the buying power of the $600. The federal government realizes the impact inflation has on the elderly and in their social security system there is a safeguard protocol that protects the beneficiaries. The payments of social security are adjusted each year to offset the effects of inflation. Another reason the elderly are affected a lot by inflation is because the elderly spend a lot of money on medical expenses. The inflation rate in the medical field is approximately 10%. The inflation varies by goods and industries. When inflation occurs in food prices the lower class is affected the most because poor people have limited income to pay to its food necessities. The amount of inflation in an economy depends on the country. In the United States the inflation rate as of February 2011 was 2.1% (Tradingeconomics). Historically the United States has always had a low inflation rate. There are parts countries in this world that have been completely destabilized by the effects of inflation. A phenomenon in economics known as hyperinflation can destroy an economic system. Hyperinflation can be defined as extreme or excessive inflation. A country that is currently going through a hyperinflation crisis is Zimbabwe. Two other countries that have suffered through hyperinflation in the past are Argentina and Russia. In the past the cost of living was much lower. We have heard stories how our grandparents used to pay a few pennies for a can of coke or a pound of bread. Through the passage of time things have gotten much more expensive. Despite lower wages our ancestors had great wealth because they could buy more goods and services with less money. During those years owning land and homes was more accessible because prices were much lower. When inflation goes up in the United States the Federal Reserve can take measures to control inflation. This is called monetary policies. The current chairman of the FED is Ben Bernanke. Inflation is an economic variable that Read More
Cite this document
  • APA
  • MLA
(“Inflation Research Paper Example | Topics and Well Written Essays - 750 words - 1”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1416087-inflation
(Inflation Research Paper Example | Topics and Well Written Essays - 750 Words - 1)
“Inflation Research Paper Example | Topics and Well Written Essays - 750 Words - 1”, n.d. https://studentshare.org/macro-microeconomics/1416087-inflation.
  • Cited: 0 times
Comments (1)
Click to create a comment or rate a document
edna60 added comment 3 months ago
Student rated this paper as
I didn’t know how to start my essay. "Inflation" helped me out a lot! Especially the list of resources was valuable.
Interrelationships between economic growth, unemployment and inflation
It is shown in the paper that the concepts of economic growth, inflation and unemployment are associated with each other and influence each other as well. In any country, government wants the economic growth to be quick, on the other hand it is desired that the rates of unemployment were low along with rates of inflation within normal range.
6 Pages(1500 words)Research Paper
Simply put, inflation refers to the rise in the prices of goods and services in a given economy for a given period of time. When such a thing happens, it therefore means that each unit of currency in that particular economy buys fewer goods than what it could have purchased initially before the inflation.
3 Pages(750 words)Research Paper
ce, in the 2007, European economies considered improving such conditions; however, the sudden effect of the global credit set in and changed many things including: 4. The ratio of debt to GDP increased- The rise in debt levels and the fall of GDP is a crisis. With increased
5 Pages(1250 words)Literature review
Effect of inflation on wages
Inflation denotes an unfavorable situation in the economy of a nation. On the other hand, wages refer to a form of remuneration offered to an employee by an employer of a particular company in exchange for services rendered.
12 Pages(3000 words)Research Paper
Inflation and the cpi index
It demonstrates the rate at which prices for goods and services rise as purchasing power of the target population falls. It is the duty of the central bank to stop severe inflation, control it for purposes of lowering excessive growth of prices. Most notably, inflation is a major factor in the world economy where it affects economies of scale and factors of productions.
5 Pages(1250 words)Research Paper
Major Sources of Inflation
Economists term this phenomenon as inflation. Purchasing power of money falls in this period and as a result money buys less than it was buying before. (Lipsey and Chrystal, 2003) In an ordinary economic cycle, every boom is followed by a
3 Pages(750 words)Research Paper
Levels of Inflation in Brazil
According to the paper findings, high inflation is one of the costs that an economy has to pay for expansion. In order for an economy to grow, there is bound to be a rise in the rate of inflation and the same is the case with the economy of Brazil. The growth in the economy in the recent past has kept the rate of inflation high.
2 Pages(500 words)Research Paper
Academic Inflation
lation is the most popular term that is used by the business graduates globally as they have realized that the degrees that they are holding such as Undergraduate degree or Bachelor’s degree has depreciated in value and they will have to obtain higher level degrees to be
7 Pages(1750 words)Research Paper
Grades inflation in colleges in the USA
However, research has indicated that grade inflation in different colleges in the United States has lowered the intellectual level and integrity of many college graduates Evaluation of courses by students is a factor that has
1 Pages(250 words)Research Paper
Inflation in the United States
The most reliable measure of inflation levels is the overall consumer index (CPI-U). CPI-U measures the average price of a fixed set or basket of goods and services. Various economies of the world have been experiencing an increasing rate of inflation over the past decade.
3 Pages(750 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Let us find you another Research Paper on topic Inflation for FREE!
logo footer
Contact us:
Contact Us Now
FREE Mobile Apps:
  • StudentShare App Store
  • StudentShare Google play
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • Miscellaneous
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us