Whenever the topic of inflation is raised, it is natural to be flooded with divided opinions, isn’t it? To put it straight, inflation is something that can never bring happy news to consumers. Even if there is a fractional increase in the cost of any commodity, it impacts the world economy at large. This is even one of the most recurrent topics upon which our economics assignment help experts provide assistance to students. The reason being, many economics assignments that students bring to us are centred around this topic. Thus, in this blog, My Assignment Services brings forth some lesser-known things about inflation that you might want to know before approaching your economics assignments. Read further to know more.
If you think that you have gained expertise in the concept of inflation, then you must be knowing the 3 types of inflation that majorly form the sections in every economics assignment. We host a panel of trained and experienced economics assignment writing experts who have graduated from renowned universities. Naturally, there is no aspect of inflation that we do not know. So, we are fully geared up to assist you with all your assignment perils.
With the discussion on these three types of inflation, we are now ready to proceed with the main topic of this blog.
1. The definition of inflation and who is the one responsible for it?
In situations when the average cost of goods and services shoots up over a fixed span of time, it is known as inflation. The most interesting feature of inflation is when an economy comes to terms with it, then there is a reduction in the purchasing power of a dollar. This means that there is a loss in the face value of money. Or in other words, money loses its value when inflation happens.
Talking about who controls it, as per our economics assignment help experts, this is regulated indirectly by all the policies that are laid by the Federal reserve in different regions of the world.
2. The role of the Central Bank in controlling inflation
Although the banks do all their bits to keep inflation in control, many times they are not able to do so. On some occasions, such as during the festivals, the Central Bank deviates from its original goal. Thus, it is not always in the hands of the bank to regulate inflation and recession; it depends on a lot of other factors as well.
3. Indexes used by banks when they analyse inflation
There are a variety of inflation rates that banks consider while studying the pattern of inflation in a region. However, the index of the personal consumption expenditure price is what these banks consider to be the official target that they have to meet.
4. What is the FTI rate?
FTI or Fed Target Inflation rate is an important concept when it comes to discussion on inflation and other associated concepts. It is evident that Fed fulfills all its KRAs to regulate a normal rate of inflation, which is solely dependent on the economic conditions in any country. To do it in the most optimum manner, Fed has set a fixed target to answer all the expectations of people on inflation. Based on this rate, the Central Bank either minimises or maximises the rate of interest to meet this target.
5. Is there any third type of inflation?
As the infographic discusses the two main types of inflation that are the demand-pull and cost-pull inflation, students generally think that there are just two types of inflation. However, there is a third one as well. It is known as the built-in inflation. Built-in inflation is due to the expectation which people have for future inflation. This is the condition in which prices rise due to which, labors expect a rise in their wages as well to maintain a smooth life in the future.
6. The real measurement of inflation
As per our assignment help experts, inflation is measured in two ways. One unit for measuring it is the Consumer Price Index (CPI) and the other unit is the wholesale price index (WPI). As WPI is measured on a weekly basis, it has more credibility as compared to CPI.
7. The unusual strong relationship between money growth and inflation
It has been observed by our economics assignment help experts that there is a strong relationship between money growth and inflation. This is also the concept that is used in almost every economics assignment, which is why you need to be clear about it. If you increase the supply of money, then it will cause inflation. Why? This is because the goods remain the same and their exploitation or usage increases. And when the monetary demand will increase, the prices will decrease. On the contrary, if the supply of money is constant as the real output, then there will be no increase or decrease in the prices.
Are you still confused? Take a look at the table below to understand it better.
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Over the span of 10 years, we have witnessed students who face a lot of problems dealing with the calculations and numerical involved in their economics assignments.
Are you too one of them? Our economics assignment help team has a lot to offer. Not just expert guidance over any challenging concept like inflation, we also provide high-quality reference assignment solutions that will help you understand each of the concepts easily and assist you in applying it in your assessments. Do speak to our customer care team and find solutions to your queries with the help of our economics experts.