Question

In: Economics

1. Describe consumption and saving household in the Czech Republic in the previous years. Please detail...

1. Describe consumption and saving household in the Czech Republic in the previous years. Please detail

2. Compare the development of the inflation rate in the Czech Republic to  the world in 2018. Please detail

Solutions

Expert Solution

The Czech Republic economy maintains the European social model and is a high income welfare state. It is a developed export oriented social marketing economy based in services, manufacturing and innovation. The data for this state is available on the World Bank and International Monetary Fund (IMF) website, hence I have picked up the data from there.

Consumption and saving in the economy are indicators that help in determining the GDP of an economy. The consumption and savings data for Czech Republic is taken from the time period of 2000-2019.

The figure above show the saving rate and final comsuption expenditure of Czech Republic. Both the incdators are in percentage terms that show the annual percentage of saving and comsuption expenditure in the particular year. It can be seen that since 2014 both the rates have almost being stagnant in the economy. There is also an inverse relationship between the savings rate and consumption rate. If the consumption increases then saving in the economy falls and vice versa. This is becuase, with increase in consuption more money is spent is little is left to be saved thus the relation is inverse.

Inflation shows the average consumer prices of the economy. The graph below compares the inflation of Czech Republic with rest of the world. It is seen that in 2018 the difference between the inflation is very less and however in 2019 Czech recorded inflation higher than the world inflation. The rising consumption expenditure caused the inflation to rise in the economy (OECD report).


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