- Hurt by Inflation:
- lenders (banks)- people w/ a fixed income (elderly, welfare)- savers (save money at a certain rate)
- Helped by Inflation:
- debtors (locked in at a specific rate)- a business where the price of the product increases faster than the price of resources
- C O L A - Cost of Living Adjustment:
-elderly receive this, helps them.
- Real Interest Rate(adjusted for inflation) vs. Nominal Interest Rate (NOT adjusted for inflation):
-Nominal interest:
-nominal interest rate = inflation + real interest rate
-%increase in $you pay the lender for the use of $ you borrow-not adjust for inflation
-percent increase in purchasing power (lender receives when borrower repays land with
interest
Your video of "Types of Unemployment", helped me understand much more of the meaning of unemployment and what kind of jobs there is that are permanent, temporary, and hard to change out of. For the video about inflation, it informs me that the government is aware on how inflation can become very high, because it has risen from 1990's to today's times. It also informs me of how inflation can occur and what causes it.
ReplyDeleteThe examples you listed about people who are hurt by inflation helps me better understand the meaning. Another example of people who are hurt by inflation also includes people who are retired and on pigeon plan
ReplyDelete