the tendency for the general lever of prices in an economy to increase over time.

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3
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2answers
199 views

because bitcoins do not generate earnings, then (it is a ponzi scheme)?

What does the author mean with: Since Bitcoins do not generate any actual earnings, they must appreciate in value to ensure that people are willing to hold them. Why must they appreciate in ...
-1
votes
0answers
14 views

Price Changes Homework Help [on hold]

Twenty years ago your rich uncle invested $10,000 in an aggressive (i.e., risky) mutual fund. Much to your uncle’s chagrin, the value of his investment declined by 18% during the first year and then ...
1
vote
2answers
35 views

Macroeconomics and equilibrium

Preliminary note: I have nearly zero economical background, I am a physicist and my question is probably very naive, but I would like a clear and simple explanation. If I am not wrong, the global ...
1
vote
0answers
30 views

Why does the ECB use the 5y5y rate to measure inflation

I cannot understand why the 5y5y swap rate measures inflation. I can see how the floating rate somewhat measures the rate of interest rates which are related to inflation. However I cannot understand ...
1
vote
0answers
24 views

Are there any financial instruments that offer a set real interest rate rather than a set interest rate? [migrated]

Are there any financial instruments that offer a set real interest rate rather than a set interest rate? For example, an asset structured like this: The asset is purchased at an initial price $P$ and ...
6
votes
2answers
64 views

Why is the Chilean economy so much better than the rest of the countries in South America?

Why does Chile have a better economy than all of the other countries in latin America? It is labeled as a high income country by the IMF, It is the only Latin American country that is part of the ...
3
votes
2answers
61 views

The Printing of Money for Paying Debt

I know that printing money causes inflation, but what if we print it to pay back our debts? For example, we have N dollars of debt to China. We can just print the N dollars and give it to China. ...
0
votes
1answer
25 views

Basic model where inflation occurs

Why does inflation occur? To an outsider, inflation appears somewhat mysterious. Is there an extremely simple mathematical model where inflation naturally occurs? I would like something that even ...
3
votes
1answer
39 views

Do heterogeneity in consumption baskets lead to very different inflation rates for different consumers?

CPI is measured against a single consumption basket. In reality, consumers each have their own set of consumption goods, so each face their own "individualized CPI" rates. But how different are ...
2
votes
0answers
26 views

On official bank rate of Sweden

I been hearing that the actions of the ECB greatly influence the swedish offical bank rate, what possible "actions" would that be, theoretically?
0
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0answers
18 views

Is the average of the mean and median of inflation a meaningful metric?

I am very comfortable with the definitions of median and mean; I don't need that explained to me. However, I just came across a chart from an economist which compares the "Headline inflation" rate ...
1
vote
1answer
29 views

Venezuelan black market exchange

EDIT: for future reference, I found out that many businesses price accordingly to the black market rate. Trading at the official Venezuelan exchange rate is, at time of writing, about 1:10 USD:VEF. ...
0
votes
0answers
16 views

Why is the current WDI missing CPI data for some countries (including the UK and China)?

I'm downloading data on inflation in different countries, and using the World Bank's World Development Indicators (WDI). Specifically, the Consumer Price Index series (CPI). (http://data.worldbank.org/...
1
vote
1answer
31 views

How much inflation will changes to official wage benchmarks cause?

For example, right now Livable Wage hovers around \$20 an hour. That's around \$40,000 a year. Let's say the US somehow will give \$50,000 a year as a "Guaranteed basic income". How high will the "...
1
vote
1answer
43 views

How do I adjust for inflation?

I will begin by saying that I have very little knowledge about economics, so don't make any presumptions. My problem is that I want to calculate the actual value of gold in Swedish Krona(SEK) for the ...
0
votes
0answers
9 views

Superlative and Cost-of-Living Indexes: how are they related?

I was reading about the Boskin Commission for CPI in the United States and the topic of finding formulas to have the inflation index number be a true cost-of-living index came up. From what I ...
3
votes
1answer
33 views

Ln differenced price level times 400, why 400?

I am replicating a 2001 Journal of Economic Perspectives methodology paper on Vector Autoregression by James H. Stock and Adam Watson. The paper can be found here: http://faculty.washington.edu/ezivot/...
1
vote
1answer
38 views

Why did the Fed raise interest rates between 2004 and 2006?

Between June 2004 and August 2006, the Fed raised interest rates again and again, because they were "...growing more uncomfortable about inflation". Looking at the graph below, inflation did increase,...
5
votes
1answer
68 views

Why is deflation not considered the opposite of inflation?

In this article from 2013 on bitcoin, the author casually states the importance of knowing that "deflation is not the opposite of inflation", without expanding or elaborating. I'm sure that there are ...
0
votes
0answers
14 views

Calculating minimum wage relative to CPI

I don't have much economincs knowledge, but am working on a project that involves me needing to calculate for every dollar increase in minimum wage from 1972, how much has the price of an average item ...
0
votes
2answers
43 views

Monetary Policy - How can increasing interest rates cause higher inflation in the short term?

My understanding of the interest rates part of monetary policy is the follows: Borrower's point of view: An increase in interest rates, increases the cost of borrowing, which may reduce disposable ...
1
vote
1answer
42 views

Is inflation good? [duplicate]

I was reading that the Spanish received so much gold from their occupation of the Americas, that they had a steep rise in inflation. This caused a rapid increase in investment, as the rich felt that ...
-1
votes
1answer
29 views

Why do Latin American countries fare among the worst at managing inflation

Does it have to do with cultural factors? Ex: they were colonies of Spain and Portugal who themselves are not that great at managing their economies relative to other western European countries.
1
vote
0answers
21 views

Core inflation, QE and credibility of ECB

In macro we learn that credibility is very important for a Central Bank (CB), since it allows for less onerous adjustments for the economy. In the recent(?) past, the newspapers have becoming ...
3
votes
1answer
24 views

Is there an economic term that means the same thing as “personal inflation”

I don't have anything even close to what would be considered formal education in terms of economics, so the term "personal inflation," is just something I completely made up. What I mean by personal ...
0
votes
0answers
17 views

Currency and Inflation : Nominal rate

The inflation rate in USA is 3% and the inflation rate in Germany is 1%. The US dollar has appreciated by 2% in real terms. What must have happened to dollar in nominal terms? I cannot wrap my head ...
0
votes
1answer
40 views

Effect of positive inflation shock on the exchange rate

How does a positive inflation shock affect the exchange rate? Does the exchange rate appreciate or depreciate? I am looking for an intuitive explanation.
4
votes
2answers
46 views

Can changes in the value of money be measured via interest rates and future contracts?

For most goods, we can compare the value of them by how people trade them. If in a free market, 10 apples can be traded for 20 oranges, then apples are twice as valuable as oranges. Likewise, if 10 ...
1
vote
0answers
26 views

Equal payment series compound interest problem

I am stuck on a textbook question for a long time now. What is the amount of quarterly deposits A, such that you will be able to withdraw the amounts in cash flow diagram if the interest rate is 8% ...
1
vote
1answer
20 views

Inflation and daily items

I was a document released by our Central Bank and I came across this line. Finally, inflation in the items of daily use was much lower as compared to other items. The contribution of essential ...
8
votes
1answer
806 views

Does a strong US Dollar hurt American Manufacturing?

I am reading this article about the strengthening of the US Dollar when I came across this paragraph: "But there are reasons to be cautious. A strong dollar will squeeze American manufacturers, ...
3
votes
1answer
57 views

Will a Guaranteed minimum income not eventually just be crowded out by inflation?

That is, if we implement a guaranteed minimum income, would inflation not eventually rise to a point where it is essentially useless? I would expect prices to be adjusted knowing people have a certain ...
0
votes
1answer
31 views

Why do increase in firms profit margins cause cost push inflation?

I read somewhere that this was the case. I get what profit margins and cost-push inflation are, but don't see how increase in marginal profit causes cost-push inflation? Also, how does increase in ...
1
vote
0answers
38 views

Why is inflation rate so low in euro zone?

Inflation rate for Eurozone in December 2015 was 0.2%. In November 2015 it was 0.1%. Meanwhile ECBs target is annual 2% and it seems that ECB does everything it can to push the inflation to the target....
1
vote
1answer
39 views

Using web scraped data for consumer price indices

Is there information and literature regarding comparative consumer price index methods? Specifically, the web scraping method of index construction?
0
votes
2answers
42 views

How come that the “right” inflation is positive?

I'm sorry if this question is too naive or too basic, but this is puzzling me for some time. I have read in several places that inflation should be positive, at about 2%-3%. The most recent example ...
3
votes
0answers
24 views

When considering the wealth of the 19th century American moguls, is it more correct to think in terms of inflation or percentage of GDP?

I generally see the wealth of Rockefeller and Carnegie variously estimated between \$150 billion and $400 billion when translated into modern terms. However, when only taking inflation into account, ...
0
votes
0answers
22 views

When nominal interest rates reach zero bound,why inflation will turn to have a positive relation with output gap?

From the graph, inflation has a negative relation with output gap when interest rates are higher than zero but turn to a positive relation when reach zero. I cannot understand why the relationship ...
1
vote
2answers
148 views

How do excessive foreign reserves cause inflation?

I have studied that accumulation of foreign reserve has the potential to raise inflation levels in economy as the money base increases (= domestic currency + foreign reserve increases) and if it ...
3
votes
1answer
35 views

How rate rise by the Fed, higher than market expectation will lead to strengthening of Dollar?

If the Fed follows through on its forecasts, though, and raises rates faster than markets expect in 2016, the dollar may well rise further, dampening inflation quickly From : http://www.economist....
4
votes
2answers
131 views

Inflation without Increase in Money Supply?

Is it possible to have inflation without increase in the supply of money? For example, if workers demanded higher wages, and goods went up in price, but the money supply in circulation did not ...
2
votes
2answers
61 views

Do house prices increases affect inflation?

In this book, page 202, the authors develop the idea that when the central bank increases the interest rates to get the CPI inflation back to target inflation, it will not necessarily cut off an ...
0
votes
2answers
51 views

Macroeconomics - Fiscal/Monetary Policy and the Price level

I was studying for my macroeconomics test by solving test banks and I came upon this question which has been really bugging me. To decrease the price level A.the Fed could buy bonds and the ...
2
votes
4answers
178 views

In the short run, why do higher interest rate lower inflation?

A common interpretation is "Higher interest rates put less borrowing power in the hands of consumers and businesses. And when they spend less, firms are not selling everything and prices naturally ...
1
vote
0answers
28 views

Inflation - Output Trade-off in the Adaptive and Rational Expectations Philips Curve

In the Adaptive Philips Curve, $E(\pi_t|I_{t-1})=\pi_{t-1}$. I'm reading a macro book, and the authors state that there is no long-term trade-off, i.e., when making the economy run at a level other ...
0
votes
2answers
73 views

Do rising inequalities create inflation?

When the "richs"* get richers, the "poors"* get poorer... assuming: h1) a constant volume of money, h2) a constant volume of people, h3) a close separation between the two groups of people, h4) a ...
1
vote
2answers
44 views

Why GDP positive growth does not decrease inflation?

My understanding is : If production increases, it would imply the amount of goods increases as well for the same amount of money available in the market. Because of this, we should see prices of goods ...
3
votes
2answers
55 views

Currency and Government

I have written down an explanation to one of the famous questions "why can't government print money to pay its debt"? after researching for some time on google, I need opinions as to whether this is ...
7
votes
4answers
139 views

Can absence of inflation be accounted for by a reconfigured class structure?

A previous and oft-heard question asked why no inflation results from the Fed pumping money into the economy. Are we simply seeing a methodical wage suppression, thus no official "inflation," while ...
4
votes
7answers
188 views

Why didn't the money printing by the US Federal Reserve since 2008 lead to inflation?

http://www.telegraph.co.uk/finance/comment/liamhalligan/8484530/Americas-reckless-money-printing-could-put-the-world-back-into-crisis.html America's reckless money-printing could put the world ...