Economics Stack Exchange
Economics Stack Exchange

Questions tagged [inflation]

Inflation is generalized increase of prices of goods and services in an economy, along with a corresponding fall in the purchasing value of money. The rate of inflation refers to the increase of the price of goods and services over time.

646 questions
17
votes
4 answers

Why can't a country print its own money to spend it only abroad?

If a country prints money and distributes it between the people, it causes inflation. But what if a country prints its own money to spend ONLY abroad, which would allow a country to buy whatever it wants. What's wrong with this logic?
Dylan Zammit
  • 273
  • 1
  • 2
  • 5
9
votes
3 answers

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 increase. Or is this an impossible paradox?
Bob Umadbro
  • 93
  • 1
  • 4
7
votes
3 answers

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?
Richard Smith
  • 225
  • 1
  • 4
  • 7
7
votes
2 answers

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 can cost \$1.15 per pound and the median monthly…
Alex
  • 73
  • 3
6
votes
2 answers

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, an increase in Canada's CPI means Canadian…
Nixu
  • 139
  • 3
6
votes
4 answers

Would a major wealth redistribution cause a major inflation?

I've seen a video on wealth distribution on the US where perceived, "desired"(by the majority) and actual income distributions are shown. I've been thinking what would happen to the purchasing power if such a distribution was attained. How much…
galmeida
  • 161
  • 1
  • 3
5
votes
2 answers

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 insane costs for basic items and with note-values…
Richard
  • 151
  • 4
5
votes
2 answers

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 those "individual CPI rates"? Has there been work on…
J Li
  • 291
  • 1
  • 4
3
votes
1 answer

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 inflation increase? Why would the cost of Product X…
Ahmed Tawfik
  • 143
  • 3
3
votes
2 answers

Did Zimbabwe have an inflation of 89.7 sextillion percent?

From a Cato Institute article by Steve Hanke1 (emphasis added): The Economist’s most recent infraction on Zimbabwe’s hyperinflation appeared in the May 2016 issue. The magazine claimed that the hyperinflation peaked at an annual rate of 500 billion…
user23076
3
votes
0 answers

Inflation index and longevity of modern household appliances

The cost of household appliances and TVs are part of the Inflation Index. It is well known fact that modern appliances and TVs last 1/3 -1/2 time as comparing to 10-20 years ago and every time we buy new item the government collects the taxes.…
natalia
  • 31
  • 1
3
votes
6 answers

How does printing money cause inflation?

I've had this doubt for a long time and I still can't find a proper answer to it. Most answers I get just partially explain the phenomenon of a general increase in price level. I want to understand WHY and HOW monetary issue causes inflation. I'm…
Juan123
  • 41
  • 1
  • 1
  • 4
3
votes
2 answers

Inflation, Future, And Value of Money - deciding to buy a house

I live in Asia where the inflation rate is approximately around 4.5-6% (average) in last 10 years. If in the next 10 years I plan to buy a house in other country (any country which I have the currency). Should I choose to buy the currency which have…
dsc81
  • 31
  • 2
3
votes
1 answer

Will inflation rate be the same if we use different base year?

I saw this chart where CPI for 2003 is 1.84, for 2004, is 1.889. I dont know the base year because its not in the chart. But base year has to have CPI of 1. If we instead use 2003 as base year, is the inflation rate during 2003-2004 period, going to…
most venerable sir
  • 141
  • 3
2
votes
0 answers

Are interest rates increases fighting inflation?

Central banks are stubbornly increasing rates to fight current spike of inflation. Inflation, especially in Europe but also in the USA, is mainly supply driven and, killing demand to try to tame an increase in prices which derives mainly from the…
user067531
  • 121
  • 2
1
2 3 4 5 6