INFLATION

Questão	Responda
Inflation	a steady and persistent increase in the general level of prices. It's the rate at which money loses its ability to buy things.
Measuring inflation	Price in any year/Price in base year x 100
the consumer price index	measures the price changes of all goods and services typically consumed. Compares a base year with the current cost.
Household budget enquiry	Research carried out five-yearly to capture changes in the overall pattern of consumer behaviour. Categories of spending are apportioned weights according to how much of the "shopping basket" they take up.
CPI uses	measures rate of inflation
CPI uses	we can compare our inflation rate internationally - its important our prices aren't racing head in comparison to other countries
CPI uses	an indicator of the health of an economy and a government's performance i.e. is price stability being maintained?
CPI uses	indexation of savings and investments. When financial products eg pensions are index-linked they are kept in line with inflation.
CPI uses	wage negotiations employee groups will try to lever greater-than inflation pay rises for its members; or at least inflation level pay rises.
CPI uses	the govt will use the rate of inflation to index-link tax bands so that employees do not pay more tax. And to justify social welfare rises so recipients can maintain their std of living.
Precautions around CPI	Being an average measure it cannot capture the subtleties of individual spending e.g non-smokers/non-drinkers
Precautions around CPI	does not capture a cost of living index which considers tax changes income subbing between cheaper and dearer goods.
Precautions around CPI	the "basket-of-goods" can out-date quickly not keeping in line with quickly-changing consumer trends and spending patterns.
Precautions around CPI	that which measures the proportion of money spent on a category ie the weights may also prove out of sync with customer preferences.
Precautions around CPI	As a "raw" measure of price the CPI has nothing to say about changes in quality.
Precautions around CPI	does not account for customers switching to cheaper choices.
What factors cause inflation?	demand-pull: too much money chasing too few goods
What factors cause inflation?	cost-push factors companies will pass on increases in their costs of production
What factors cause inflation?	imported inflation if oil increases or the euro falls in value then sterling and dollar goods are dearer
What factors cause inflation?	Govt factors - increase in duties or VAT will lead to inflation. Tax reductions could lead to greater spending/greater demand thus sparking some inflation.
Remedies to limit inflation	Fiscal policy: increasing tax-credits helps employers' costs as it means employees are paying less tax and not pushing for higher wages
Remedies to limit inflation	govt. could reduce spending so dampening demand although this will always face strong opposition from effected parties.
Remedies to limit inflation	Monetary policy ECB will increase interest rates ( price of money) to encourage saving/reduce borrowing and apply the brakes to an overheating economy.
Partnership agreements	Trade union(ICTU) and employee groups (IBEC) and govt could cooperate to keep prices stable. Modest pay rises for modest productivity increases.

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	Criado por John O'Driscoll quase 9 anos atrás