On the flip side, demand-pull inflation occurs when consumers have resilient interest for a service or good. Such demand could result from things like a low jobless rate, strong consumer confidence or low interest rates. Companies, however, can’t always keep up with that robust demand, leadin...
Inflation occurs when the money supply rises to the point where there is "excess" cash. This excess money supply creates excess demand for goods and services. When there’s a lot of money, or liquidity, people and companies can keep raising prices, even substantially, and still...
A small amount of inflation isn’t necessarily a bad thing. It’s a natural occurrence in thefiat currencysystems of today and is somewhat beneficial as it encourages spending and borrowing. Keeping a close eye on the rate of inflation is important, however, to ensure that it doesn’t have...
Inflation occurs when the quantity demanded at prevailing prices is greater than the quantity suppliers can profitably produce at those prices, i.e. aggregate demand exceeds the supply constraints. This view is based on an aggregate supply curve that is steeply inflected at some point that’s the...
Inflation occurs close to the maxima of the potential. As a consequence both inflations are necessarily finite. This opens the interesting possibility that the second inflation has already or is about to end. A first inflation is produced when fluctuations displace the inflaton field from its ...
And that type of surplus occurs when foreigners obtain dollars (by selling to Americans) and then decide that the best use of that money is to invest in the U.S. economy. That’s generallya signof a country’s economic strength.
You may protect yourself from increasing rents by acquiring real estate. Rents, like every consumer commodity, tend to grow when inflation rises. Mortgages have a benefit over lease terms when inflation occurs, even though they are less adjustable. ...
but the principle is the same. Turn cash into stuff. Theoretically, when inflation occurs (or people fear it will), the price of commodities rises and helps offset losses in other portions of the portfolio. As I write this the iShares commodity ETF is up 27% year to date, despite having...
But that does not necessarily mean deficit spending is inflationary. …Price inflation occurs when the supply of money exceeds the demand for money… Notably, none of the mechanisms that central banks use for monetary policy (buying and selling government securities, setting interest rates paid on ...
Such a situation when inflation rates go negative is called deflation. When the inflation rate starts to reduce at a slow rate it is called disinflation. This fall in inflation rate occurs over a short term and does not necessarily herald a slowdown in the economy, unlike deflation....