Inflation PDF

INFLATION Inflation Inflation – continuous & sustained increase in prices. Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA  CONSUMER PRICE INDEX Measures changes in the prices paid by consumers for a...

INFLATION Inflation Inflation – continuous & sustained increase in prices. Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA  CONSUMER PRICE INDEX Measures changes in the prices paid by consumers for a basket of goods and services General measures of average monthly and annual changes in the retail prices of commodities Approximate reflection of the prices of the final goods and services of the economy. Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA CONSUMER PRICE INDEX Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA CONSUMER PRICE INDEX Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Inflation Inflation – continuous & sustained increase in prices. Hyperinflation – it is the higher destruction of the value of the currency. Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Kinds of Inflation 1.Demand Pull Inflation – due to the shift in the economies demand curve Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Kinds of Inflation 1.Demand Pull Inflation – due to the shift in the economies demand curve 1. Increased money supply 2. Cyclical boom 3. Wartime period 4. Election time Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Kinds of Inflation 1.Cost Push Inflation – due to the shift in the economies demand curve Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Kinds of Inflation 1.Cost Push Inflation – due to the shift in the economies demand curve 1. Increase in Oil Prices 2. Increase in Wages 3. Monopolies Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Losers of inflation: 1. Fixed income earner 2. Pensioners 3. Creditors Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Gainers of Inflation: 1. Flexible Income 2. Speculators – perceptive businessmen 3. Debtors Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA DIFFERENT ECONOMIC CONDITIONS Inflation Hyperinflation Recession Depression Stagnation Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA ECONOMIC CYCLES ECONOMIC CYCLES An economic cycle, also known as a business cycle, refers to economic fluctuations between periods of expansion and contraction. Factors such as gross domestic product (GDP), interest rates, total employment, and consumer spending can help determine the current economic cycle stage. FINISHED 5 - 7 YEARS Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA ECONOMIC CYCLES Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA ECONOMIC CYCLES 1. EXPANSION During expansion, the economy experiences relatively rapid growth, interest rates tend to be low, and production increases. The economic indicators associated with growth, such as employment and wages, corporate profits and output, aggregate demand, and the supply of goods and services, tend to show sustained uptrends through the expansionary stage. Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA ECONOMIC CYCLES 2. PEAK The peak of a cycle is when growth hits its maximum rate. Prices and economic indicators may stabilize for a short period before reversing to the downside. Peak growth typically creates some imbalances in the economy that need to be corrected. As a result, businesses may start to reevaluate their budgets and spending when they believe that the economic cycle has reached its peak. Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA ECONOMIC CYCLES 3. CONTRACTION A correction occurs when growth slows, employment falls, and prices stagnate. As demand decreases, businesses may not immediately adjust production levels, leading to oversaturated markets with surplus supply and a downward movement in prices. If the contraction continues, the recessionary environment may spiral into a depression. Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA ECONOMIC CYCLES 4. RECOVERY The recovery phase is when the economy hits its trough, bottoms out, and begins the cycle anew. Policies enacted during the contraction phase begin to bear fruit. Businesses that retrenched during the contraction begin to ramp up again. Stock values tend to rise as investors see greater potential returns in stocks than bonds. Production ramps up to meet rising consumer demand and with it, business expansion, employment, income, and GDP.. Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA PHILIPPINE ECONOMIC CYCLES Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA Activity #2 In your notebooks: Analyze the figure in Slide 21 (Philippine Economic Cycle), and infer the reasons or determinants on the booms and busts of the Philippine Economy Licensure Exam for Agriculturists // Review Materials // Kringle Marie P. Mercado, L.Agri, MSc, MBA