inflation and deflation概要1.pptVIP

INFLATION ANDDEFLATION YING LU (Ying) YING LU (Kelly) Yen-Chih, Shen(Tony) AGENDA Inflation Deflation Case study INFLATION Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account within the economy. RELATED DEFINITIONS Increases in the amount of money in circulation ---monetary inflation A rise in the price level-----price inflation MEASURES The inflation rate is widely calculated by calculating the movement or change in a price index, usually the consumer price index. To illustrate the method of calculation, in January 2007, the U.S. Consumer Price Index was 202.416, and in January 2008 it was 211.080. The formula for calculating the annual percentage rate inflation in the CPI over the course of 2007 is CAUSES There were different schools of thought as to the causes of inflation. Most can be divided into two broad areas: Quality theories of inflation Quantity theories of inflation EFFECTS An increase in the general level of prices implies a decrease in the purchasing power of the currency. With high inflation, purchasing power is redistributed from those on fixed nominal incomes, such as some pensioners whose pensions are not indexed to the price level, towards those with variable incomes whose earnings may better keep pace with the inflation. CONTROLLING INFLATION Monetary policy Fixed exchange rates Gold standard Wage and price controls Cost-of-living allowance DEFLATION Deflation ：In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% . deflation increases the real value of money – the currency of a national or regional economy. This allows one to buy more goods w