Question

Provide a real life example in paragraph form for each of the following terms

inflation

Tariff

Federal reserve

Answer 1

Ans:

A real life example of the following terms are as follows:

1. Inflation

Inflation means rising prices of goods and services in the economy.

EG: During the last 25 year period the price of one pound bread loaf has changed drastically due to the inflation as the bureau of statistics indicate that in January 1988 the price of bread was 59 cents whereas in January 2013 the same bread cost $ 1.42 thus in the 25 years period the bread has rose by 140%.

2. Tariff.

Tariff means the tax imposed on imports inorder to protect domestic industry and also increase the revenue of government.

EG: The tariff is imposed by the U.S. government on the paper clips inorder to survive . As the paper clips are domestically manufactured and also imported from China the one which is domestically manufactured is sold for less than a penny whereas one which is imported from China is imposed a tariff of as high as 126.94%.

3.Federal Reserve

Federal reserve system is the central bank of U.S. which was created inorder to maintain the stability in financial and monetory system of the nation .

Eg: In 1978 , Volcker raised the interest rate to 9% and continued to raise it till 21.5% the rising rates  lead the banks to cut down the total spending and lending and also made companies to renogotiate their debts and cut down their costs.