Inflation - Revision history

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	<onlyinclude>'''Inflation''' describes the rise of the price of goods and services over a period of time.</onlyinclude><ref>A. B. Abel, et al. ''Macroeconomics'', ''6''th ed. Toronto, Canada: Pearson, 2011, pp. ''6''</ref> '''Inflation rate''' or '''rate of inflation''' measures the increase in price of goods and services using an average percentage, measured over a year.		<onlyinclude>'''Inflation''' describes the rise of the price of goods and services over a period of time.</onlyinclude><ref>A. B. Abel, et al. ''Macroeconomics'', ''6''th ed. Toronto, Canada: Pearson, 2011, pp. ''6''</ref> '''Inflation rate''' or '''rate of inflation''' measures the increase in price of goods and services using an average percentage, measured over a year.

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	Assume that for 2019 the CPI is $150 and for 2020 the CPI is $175:		Assume that for 2019 the CPI is $150 and for 2020 the CPI is $175:

	::::::::Inflation Rate = <math>\frac{175 - 150}{150} \times 100 =16.6%</math>		::::::::Inflation Rate = <math>\frac{175 - 150}{150} \times 100= 16.6</math> %

	==Hyperinflation==		==Hyperinflation==
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	==Deflation==		==Deflation==
	Just as inflation is the rise in the CPI, '''deflation''' is a fall in the CPI over time.<ref>N.G. Mankiw et al. ''Principles of Macroeconomics 5th ed.'' pp. ''241''.</ref> Deflation occurs when the rate of inflation falls below zero. Contrary to inflation, in a deflation situation a consumer is able to buy more with less [[money]]. After the [[Great depression]] of the 1930s, there was a period of deflation where the [[demand]] for investment was not being met and economic growth stalled.<ref>M. S. Kumar et al. ''Deflation: Determinants, Risks, and Policy Options- Findings of an Interdepartmental Task Force''. [Online], Available: http://www.imf.org/external/pubs/ft/def/2003/eng/043003.htm [Apr 30, 2003].</ref>		Just as inflation is the rise in the CPI, '''deflation''' is a fall in the CPI over time.<ref>N.G. Mankiw et al. ''Principles of Macroeconomics 5th ed.'' pp. ''241''.</ref> Deflation occurs when the rate of inflation falls below zero. Contrary to inflation, in a deflation situation a consumer is able to buy more with less [[money]]. After the [[Great depression]] of the 1930s, there was a period of deflation where the [[demand]] for investment was not being met and economic growth stalled.<ref>M. S. Kumar et al. ''Deflation: Determinants, Risks, and Policy Options- Findings of an Interdepartmental Task Force''. [Online], Available: http://www.imf.org/external/pubs/ft/def/2003/eng/043003.htm [Apr 30, 2003].</ref>

			==For Further Reading==
			*[[Wealth]]
			*[[Cost]]
			*[[Price]]
			*[[Money]]
			*Or explore a [[Special:Random\|random page]]

	==References==		==References==
	{{reflist}}		{{reflist}}
	[[Category: Uploaded]]		[[Category: Uploaded]]

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	[[Category:Done ~~2016~~-04-30]]		[[Category:Done 2018-05-18]]
	<onlyinclude>'''Inflation''' describes the rise of the price of goods and services over a period of time.</onlyinclude><ref>A. B. Abel, et al. ''Macroeconomics'', ''6''th ed. Toronto, Canada: Pearson, 2011, pp. ''6''</ref> ~~Inflation is presented as a rate, if the prices of goods and services rise by an average percentage over a year then the~~ '''~~inflation~~ rate''' or '''rate of inflation''' ~~is said to be that~~ percentage.		<onlyinclude>'''Inflation''' describes the rise of the price of goods and services over a period of time.</onlyinclude><ref>A. B. Abel, et al. ''Macroeconomics'', ''6''th ed. Toronto, Canada: Pearson, 2011, pp. ''6''</ref> '''Inflation rate''' or '''rate of inflation''' measures the increase in price of goods and services using an average percentage, measured over a year.

	The calculation of the inflation rate uses the change in the [[consumer price index]] (CPI) from one year to the next. The CPI consists of specified goods and services that the average family purchases, it can be anything from groceries to gasoline.<ref>R. A. Brealey et al. ''Fundamentals of Corporate Finance''. Toronto: McGraw-Hill Ryerson, 2009, pp. 108-109.</ref> The CPI for a given year is expressed in the amount it costs to purchase the good and services it contains in dollars ($).		The calculation of the inflation rate uses the change in the [[consumer price index]] (CPI) from one year to the next. The CPI consists of specified goods and services that the average family purchases, it can be anything from groceries to gasoline.<ref>R. A. Brealey et al. ''Fundamentals of Corporate Finance''. Toronto: McGraw-Hill Ryerson, 2009, pp. 108-109.</ref> The CPI for a given year is expressed in the amount it costs to purchase the good and services it contains in dollars ($).

	Assume that for ~~2014~~ the CPI is $150 and for ~~2015~~ the CPI is $175:		Assume that for 2019 the CPI is $150 and for 2020 the CPI is $175:

	::::::::Inflation Rate = <m>\frac{175 - 150}{150} \times 100 =16.6%</m>		::::::::Inflation Rate = <math>\frac{175 - 150}{150} \times 100 =16.6%</math>

	==Hyperinflation==		==Hyperinflation==
	Very rapid inflation is called '''Hyperinflation''', specifically, when the rate of inflation is more than 50% per month. At this rate prices grow ~~are~~ 100 times higher than the previous year.<ref>N.G. Mankiw et al. ''Principles of Macroeconomics 5th ed.''. Toronto: Nelson Education, 2011, ''250''.</ref> Hyperinflation must be measured monthly due to the dramatic rise in prices.		Very rapid inflation is called '''Hyperinflation''', specifically, when the rate of inflation is more than 50% per month. At this rate, prices grow 100 times higher than the previous year.<ref>N.G. Mankiw et al. ''Principles of Macroeconomics 5th ed.''. Toronto: Nelson Education, 2011, ''250''.</ref> Hyperinflation must be measured monthly due to the dramatic rise in prices.

	An example of a ~~serious case of~~ hyperinflation was in Germany after World War II~~, the case~~ was so ~~serious~~ that Germans brought wheelbarrows of [[currency \| German Marks]] to buy a loaf of bread. Similarly in Hungary from August 1945 - August 1946 there was an inflation rate of 19,800% per month.<ref>A. B. Abel, et al. ''Macroeconomics'', ''6''th ed. pp. ''514''.</ref>		An example of a major hyperinflation event was in Germany after World War II. The situation was so critical that Germans brought wheelbarrows of [[currency \| German Marks]] to buy a loaf of bread. Similarly in Hungary from August 1945 - August 1946 there was an inflation rate of 19,800% per month.<ref>A. B. Abel, et al. ''Macroeconomics'', ''6''th ed. pp. ''514''.</ref>

	==Deflation==		==Deflation==
	Just as inflation is the rise in the CPI, '''deflation''' is a fall in the CPI over time.<ref>N.G. Mankiw et al. ''Principles of Macroeconomics 5th ed.'' pp. ''241''.</ref> Deflation occurs when the rate of inflation falls below zero. In a deflation situation a consumer is able to buy more with less [[money]] ~~where as in an inflation situation, a consumer can buy less with more money~~. After the [[Great depression]] of the 1930s, there was a period of deflation where the [[demand]] for investment was not being met and economic growth stalled.<ref>M. S. Kumar et al. ''Deflation: Determinants, Risks, and Policy Options- Findings of an Interdepartmental Task Force''. [Online], Available: http://www.imf.org/external/pubs/ft/def/2003/eng/043003.htm [Apr 30, 2003].</ref>		Just as inflation is the rise in the CPI, '''deflation''' is a fall in the CPI over time.<ref>N.G. Mankiw et al. ''Principles of Macroeconomics 5th ed.'' pp. ''241''.</ref> Deflation occurs when the rate of inflation falls below zero. Contrary to inflation, in a deflation situation a consumer is able to buy more with less [[money]]. After the [[Great depression]] of the 1930s, there was a period of deflation where the [[demand]] for investment was not being met and economic growth stalled.<ref>M. S. Kumar et al. ''Deflation: Determinants, Risks, and Policy Options- Findings of an Interdepartmental Task Force''. [Online], Available: http://www.imf.org/external/pubs/ft/def/2003/eng/043003.htm [Apr 30, 2003].</ref>

	==References==		==References==
	{{reflist}}		{{reflist}}
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[[Category:Done 2016-04-30]]
<onlyinclude>'''Inflation''' describes the rise of the price of goods and services over a period of time.</onlyinclude><ref>A. B. Abel, et al. ''Macroeconomics'', ''6''th ed. Toronto, Canada: Pearson, 2011, pp. ''6''</ref> Inflation is presented as a rate, if the prices of goods and services rise by an average percentage over a year then the '''inflation rate''' or '''rate of inflation''' is said to be that percentage.

The calculation of the inflation rate uses the change in the [[consumer price index]] (CPI) from one year to the next. The CPI consists of specified goods and services that the average family purchases, it can be anything from groceries to gasoline.<ref>R. A. Brealey et al. ''Fundamentals of Corporate Finance''. Toronto: McGraw-Hill Ryerson, 2009, pp. 108-109.</ref> The CPI for a given year is expressed in the amount it costs to purchase the good and services it contains in dollars ($).

Assume that for 2014 the CPI is $150 and for 2015 the CPI is $175:

::::::::Inflation Rate = <m>\frac{175 - 150}{150} \times 100 =16.6%</m>

==Hyperinflation==
Very rapid inflation is called '''Hyperinflation''', specifically, when the rate of inflation is more than 50% per month. At this rate prices grow are 100 times higher than the previous year.<ref>N.G. Mankiw et al. ''Principles of Macroeconomics 5th ed.''. Toronto: Nelson Education, 2011, ''250''.</ref> Hyperinflation must be measured monthly due to the dramatic rise in prices.

An example of a serious case of hyperinflation was in Germany after World War II, the case was so serious that Germans brought wheelbarrows of [[currency | German Marks]] to buy a loaf of bread. Similarly in Hungary from August 1945 - August 1946 there was an inflation rate of 19,800% per month.<ref>A. B. Abel, et al. ''Macroeconomics'', ''6''th ed. pp. ''514''.</ref>

==Deflation==
Just as inflation is the rise in the CPI, '''deflation''' is a fall in the CPI over time.<ref>N.G. Mankiw et al. ''Principles of Macroeconomics 5th ed.'' pp. ''241''.</ref> Deflation occurs when the rate of inflation falls below zero. In a deflation situation a consumer is able to buy more with less [[money]] where as in an inflation situation, a consumer can buy less with more money. After the [[Great depression]] of the 1930s, there was a period of deflation where the [[demand]] for investment was not being met and economic growth stalled.<ref>M. S. Kumar et al. ''Deflation: Determinants, Risks, and Policy Options- Findings of an Interdepartmental Task Force''. [Online], Available: http://www.imf.org/external/pubs/ft/def/2003/eng/043003.htm [Apr 30, 2003].</ref>

==References==
{{reflist}}