Readers Question: I understand that inflation can cut the value of debt for countries and companies, because higher prices mean more revenue for the same output therefore additional money to pay of debt. However, does this apply to personal debt? i.e. unless my wages are rising with inflation I have no extra revenue and therefore …
Readers Question From why inflation makes it easier to pay government debt 1. Why will wages increase with inflation? There is no law that inflation will automatically lead to higher nominal wages. It is possible for inflation to be higher than the nominal wage growth. In this case, workers see a fall in real wages …
Readers Question: I thought of an analogy and wondered if I am correct. Suppose there is a concert venue that seats 10,000 people. On one day, the Rolling Stones are scheduled to perform there. Tickets are nominally $50, but since the venue is likely to sell out, scalpers buy them up. Let’s assume that Rolling …
Q. Why does Japanese Yen appreciate after Earthquake and Tsunami? Japan has suffered a tragic natural disaster. Aside from the very real human tragedies, it will have an adverse economic impact. Yet, since the crisis, the Japanese Yen has appreciated in value. Why has the Yen appreciated when perhaps you may have expected the opposite? …
Readers Question: Why do most people prefer inflation to deflation? is it because such guys are business owners and they don’t to earn a little or what ? what about poor people. how can they make ends meet? think properly, think widely, think about the poor first. then I am sure, you are going to …
UK Inflation Since 2000 Readers Question: How can we have both inflation and deflation in the economy at the same time? (the RPI falling to 0% and CPI rising to 3.2%) Deflation requires a fall in prices. We would need a negative inflation rate (e.g -0.3%) to have deflation Note if the inflation rate fell …
Readers Question: Can you please differentiate between the causes of once-off inflation and sustained inflation? A temporary period of inflation, also called one-off inflation, may be caused by: Temporary inflation in 2008 and 2011. Rising in tax rates. Suppose the chancellor announces a 10% rise in fuel duty. This means prices will rise. But, next …
Readers Question: how the unemployment and inflation is related to country’s economy If we take the example of the UK, we can see differing examples of how unemployment and inflation are related to a country’s economy. The key to this question is what causes unemployment and inflation. There are several different factors, but it is …