Inflation: Dollars Losing Value. INFLATION: Increases in Price Level Inflation (on an annual basis) is the percent change in the average price level.

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Presentation transcript:

Inflation: Dollars Losing Value

INFLATION: Increases in Price Level Inflation (on an annual basis) is the percent change in the average price level for the year Inflation (on an annual basis) is the percent change in the average price level for the year Monthly Inflation = 100% x (CPI now – CPI last month)/ CPI last month Annualized = x 12

Effects of Inflation Effects of inflation: Effects of inflation: $10 item after 1 year of $10 item after 1 year of 2% = $ % = $ % = $11 10% = $11 100% = $20 100% = $ % = $ % = $110 10,000% = $ ,000% = $ million % = 1 million % = Formula is P*(1 + decimal inflation rate) Formula is P*(1 + decimal inflation rate)

U.S. Inflation Since 1960

HIGH INFLATION COUNTRIES (cia world fact book) Uzbekistan12%2012 est. Uganda19%2012 est. Guiena15%2012 est. Venezuela26%2012 est. Sudan31%2012 est. South Sudan79%2012 est. Belarus59%2012 est. ZimbabweZimbabwe 26, est. Zimbabwe

Factors influencing inflation: Factors influencing inflation: Supply and Demand for Money