describe the cost of inflation

Expert Solution

Rahul Sunny answered 1 year ago

Inflation and deflation describe long-term trends in prices. Inflation means that the same thing will cost...

Inflation and deflation describe long-term trends in prices. Inflation means that the same thing will cost more in the future, while deflation means they cost less. When a business decision span several years these concepts need to be address. How would you account for them in your business decision analysis?

Define and explain the concept of Inflation and describe the difference between demand-pull and cost-push inflation

Question 1 (Inflation and the Macroeconomy) Distinguish between demand-pull inflation and cost-push inflation and then use...

Question 1 (Inflation and the Macroeconomy) Distinguish between demand-pull inflation and cost-push inflation and then use an AD-AS (aggregate demand/aggregate supply) model to illustrate the theoretical effects of these two types of inflation on the price level (P), employment (L) and economic growth (real GDP) in the short run. Now identify the various factors that have contributed towards demand-pull inflation and cost-push inflation in South Africa and critically analyse whether they are consistent with the predictions of the AD-AS model.

Cost-push inflation is a situation in which the:

1. Cost-push inflation is a situation in which the: short-run aggregate supply curve shifts rightward. short-run aggregate supply curve shifts leftward. aggregate demand curve shifts leftward. aggregate demand curve shifts rightward 2. Which of the following tends to make aggregate demand decrease by more than the amount that consumer spending decreases? the interest rate effect the crowding-out effect the wealth effect the multiplier effect 3. (Figure: Aggregate Demand Shift)Which...

In each of following scenarios, explain and categorize the cost of inflation. a. Because inflation has...

In each of following scenarios, explain and categorize the cost of inflation. a. Because inflation has risen, the J. Crew clothing company decides to issue a new catalog monthly rather than quaterly. b. Grandpa buys an annutity for $100,000 from an insurance company which promises to pat him $10,000 a year for the rest of his life. After buying it, he is surprised the high inflation triples the price level over next few yars. c. Maria lives in an economy...

Explain the following: M1 and M2: Demand pull inflation: cost push inflation:

Describe the goal of price stability and the costs associated with inflation (i.e., why is inflation...

Describe the goal of price stability and the costs associated with inflation (i.e., why is inflation harmful to society).

Describe how a lender can lose during inflation if the inflation is unanticipated and the loan...

Describe how a lender can lose during inflation if the inflation is unanticipated and the loan is a fixed-interest-rate loan. How would a variable-interest-rate loan (one that adjusts over the contract period) eliminate these loses?

What is cost-push inflation? What factors can start a cost-push inflation? What must the Fed's response...

What is cost-push inflation? What factors can start a cost-push inflation? What must the Fed's response be for the inflation to continue?

Define cost-push inflation. Using the AS/AD model, explain how cost-push inflation affects the level of aggregate...

Define cost-push inflation. Using the AS/AD model, explain how cost-push inflation affects the level of aggregate output and the price level in the economy. Suppose that the government uses expansionary fiscal policy to counter the effects of the cost-push inflation. Indicate using the AS-AD model the impact of this policy on the price level and level of aggregate output.

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