Inflation essays

Inflation essays In the economy the study of increases and decreases in general consumer goods or services prices is referred to as inflation and deflation respectively. Economists studying inflation or deflation study either a sustained increase or decrease in the general price level over time. The study of such is important as the effect of price levels within society effect all participants in the economy including individuals, business and government. Inflation and deflation is measured by many sources in a variety of ways, depending on how the information is to be used and who by. In Australia, the Australian Bureau of Statistics in the form of the Consumer Price Index (CPI) measures inflation and deflation. The changes in the CPI reflect the levels of inflation or deflation, which in turn encapsulates the real cost of living. The CPI is measured by the use of a basket of goods and services, all the goods and services are priced in one year and then again the following year, changes in prices can then be used to calculate inflation or deflation. In the basket of goods and services there is eight categories... Housing Equipment These categories are chosen to reflect and represent average Australians and their buying habits. This way inflation or deflation reflects the cost of living to real average Australians. In Australia the standard equation for measuring inflation or deflation is... Current inflation/deflation previous inflation/deflation 100 Inflation or Deflation Rate = x - Previous inflation/deflation 1 For example, to calculate the inflation rate between year A with a CPI of 120 and year B with a CPI of 129 we find the percentage change in the price levels which is in effect the inflation or deflation rate... Inflatio...