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

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8
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1answer
771 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
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1answer
54 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
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1answer
11 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
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0answers
33 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 ...
1
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1answer
15 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
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1answer
26 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
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0answers
22 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
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0answers
18 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
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1answer
48 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
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1answer
34 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 : ...
4
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2answers
66 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
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2answers
47 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
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2answers
37 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 ...
1
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4answers
118 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
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0answers
22 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
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2answers
71 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
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2answers
32 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
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2answers
54 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
136 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
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7answers
143 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 ...
1
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1answer
19 views

Measure of expected inflation

How is expected inflation measured for policy purposes? Is it based on some economic model or some survey?
2
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1answer
25 views

Is Quantitative Easing an asset-swapping or money-printing exercise by the Federal Reserve?

Shortly after 2008, there were prominent commentators such as Jim Rogers who called Ben Bernanke an idiot and condemn him for printing money. However, there were also articles that suggest ...
4
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1answer
69 views

What were the factors that caused the Philips curve to stop working during the 1970s?

Philips curve says that inflation and unemployment were inversely correlated. In the 1970s, stagflation happened. If Philips curve hold true, stagflation is impossible. What were the factors that ...
3
votes
1answer
19 views

Long run trade off between inflation and output

In "The incredible Volcker Disinflation" by Goodfriend and King (2005) we are presented with the NK Pricing equation $\pi_t = E_t\pi_{t+1} + h(y_t-y_t^*)$ the author then mentions that there is no ...
2
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2answers
50 views

Why are they raising interest rates in Brazil?

How does raising interest rates in Brazil (and Russia) help fight inflation and defend their currency? I understand that the basic model is that raising the rates is meant to encourage banks to lend ...
3
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2answers
53 views

With inflation so low, why is it so hard to stimulate the economy?

Usually the limiting factor in stimulating an economy is how much inflation can a currency handle before the money being spent has a negative effect overall. But now we seem to have the opposite ...
2
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1answer
56 views

Can holding interest rates at zero (ZIRP) for a very long time cause the deflation it is trying to prevent?

The fisher equation is nominal interest rate = real interest rate + inflation rate. If nominal interest rate is kept to zero, and real interest rate remains ...
6
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1answer
89 views

Differing Inflation Rates for Separate Income Groups; Literature?

So here's a few ideas that have been floating around my head since undergraduate university. It seems that money owned by the highest net wealth owners is always moving around and making a return, but ...
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0answers
32 views

What will happen to property prices if local currency weakens against USD?

Say that the conversion rate of a local currency changes so that the currency is now relatively weaker against foreign currencies and as a result the inflation rate increases and as a result of that ...
4
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2answers
89 views

If the price of oil and energy goes down, why does CPI go up?

Today, StatsCan revealed that Canada's CPI rose by 1.3%. They are attributing it to lower energy prices, led by the fall in the gasoline index (down 12.6% since one year ago). From my understanding, ...
2
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1answer
68 views

Inflation basics and understanding

In some new country, there's 1 million credits in circulation, and Product X costs 10 credits. If I were to print, say, 500,000 credits and build a new swimming pool with this, how exactly would ...
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0answers
29 views

What reasons could be of high interest rate of the central bank?

In Russia we currently have 11% of CB interest rate and you can get credit in commercial bank for about 25% in year.
1
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2answers
685 views

What will happen to bank loans in the event of hyper inflation?

Say for example a person gets a home loan of $100,000 in a certain country at an interest rate of 10%. Inflation is normally around 5% in this country. What could happen to that person's loan if the ...
2
votes
1answer
113 views

Taylor Rule: Relationship between interest rate and inflation

Q. According to the Taylor Rule, what should the central bank do to stabilize the economy after an increase in oil price? My points: Increase in oil prices (1970's) raises the price of production ...
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0answers
23 views

20th and 21th century inflation and resources prices

Where can I learn about inflation changes during 1900-2015 period concerning some western countries, in particular US, UK and Germany, plus most meaningful to economy resources (like copper) prices ...
5
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2answers
75 views

In a hyper-inflated economy, how do vendors know how much to raise their prices?

You regularly see stories about hyper-inflated economies. The common feature is that as prices spiral out of control, stores continually raise their prices to match the level of inflation, leading to ...
1
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1answer
35 views

With interest rates and inflation in the U.S. low and growth moderate, where is the money going?

Question is basically in the title. With interest rates so low for such a long period of time, I wonder where are that injected cash has gone? I realize that the economy has definetly grown quite ...
4
votes
3answers
1k views

How interest rate affects currency

I am quite new to economics. I was reading about changes in interest rates and its effect on currency value. The fact is as interest rates increases, the currency value also increases and vice ...
2
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2answers
131 views

Why is modest inflation a good thing?

I have been reading a BBC news article about inflation in the UK, which is saying that inflation has recently become negative (http://www.bbc.co.uk/news/business-33147660). The article suggests that ...
1
vote
1answer
31 views

How could monetary policy be affected if cash “gifts” to consumers were more frequently used?

A few years ago in the US, everyone who filed taxes received a check for $1000. If this method of inflation was logistically more feasible, how could this be used in monetary policy, and what ...
3
votes
3answers
86 views

Question on real exchange rate

If the Phillipine peso falls in value against the USD by 5% in a year, but the domestic inflation rate in the Phillipines is 10%, compared to 2% in the USA, the nominal exchange rate has fallen (by ...
3
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1answer
94 views

Could debt cause inflation instead of deflation?

It is well known that debt can cause deflation, especially during crisis: to repay their debts agents sell their goods which causes a fall in prices. But if there is no crisis and agents "have the ...
1
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2answers
92 views

Floating exchange rate and cost-push inflation?

I have a trouble understanding the following text from my textbook. I bolded the fragments that don't make sense to me. "Disadvantages of a floating exchange rate: A floating exchange rate regime may ...
3
votes
2answers
129 views

How inflation affects exchange rates?

I have a question regarding the impact of inflation on exchange rate between trading countries. Let's assume a hypothetical situation where the UK and the USA trade with each other. The USA import ...
1
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2answers
91 views

Does Dogecoin or Bitcoin have a more appropriate rate of monetary inflation?

The supply of new Bitcoins and Dogecoins is depicted in the graph below. The Bitcoin inflation rate is currently higher than the Dogecoin rate, but it reduces sharply to a rate close to zero. It ...
4
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3answers
173 views

Why is a higher inflation rate bad for international competitiveness?

Why if there's a higher inflation rate in country A then its exports are less competitive and its trading partners prefer to buy from countries with lower inflation rates?
8
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2answers
261 views

Why do indebted governments fear deflation?

It's widely accepted among people who follow finance that various governments around the world, including the US government, are doing (or their central banks are doing) everything possible to keep ...
10
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3answers
466 views

Is zero inflation desirable?

Is zero inflation really desirable? To be more precise: Does inflation in real life have benefits that in some situations outweigh its social cost? E.g.: it works as a tax on holding money (and the ...
7
votes
2answers
87 views

Why did large denomiations exist in the early 20th century?

In the early 1900s, you could buy a newspaper for 5 cents, a pound of apples for 10 cents and the average salary was about \$40 a month. Nowadays, an issue of the NYT costs \$2.50 , a pound of apples ...
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1answer
44 views

How does inflation in income go 'hand in hand with inflation in prices'?

Source: p 594, Economics, 3 Ed, 2014, by N G Mankiw, M P Taylor Yet further thought reveals a fallacy in this answer. When prices rise, buyers of goods and services pay more for what they buy. ...