Inflation: consequences and causes

Let's start with some consequences of inflation. One of them is redistribution. Redistribution means moving income away from certain groups in the economy towards other groups. 

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Explain on an example why borrowers tend to be helped by inflation.

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Explain using examples who are 'fixed income' earners and why they lose when inflation occurs. Give at least 2 examples other than typical fixed wage-earner (Textbook!).

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'When inflation in our country is higher than elsewhere our firms will export less, but imports will be smaller as well, ceteris paribus.' Is it true? Why?

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At least one important group that loses during inflation and one that gains are missing in the table. Find them in the textbook and explain why the lose/gain?

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Apart from redistribution, there are some other consequences of inflation. The image above refers to one or them which one? Explain the mechanism.

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Why inflation leads to uncertainity? Do you agree that this might be considered as the biggest negative consequence of inflation? Why? Why not?

Now we move to CAUSES of inflation. Watch a video of a historical example of  demand-pull inflation and answer the questions below:

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What are the economic objectives that Kennedy managed to achieve?

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What does Vietnam war have to do with the economic situation in the US under Johnson?

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Why the author considers social programs under Kennedy as being beneficial for the economy and social programs under Johnson as being detrimental for the economy?

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Draw a diagram showing a demand-pull inflation (please label the y-axis better than the author did;).

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What does it mean that the economy gets 'overheated'?

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What does 'stagflation' stand for?

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What were the 2 events in the 70. that contributed to stagflation in th US (and elsewhere)?

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Why these events caused inflation - explain the mechanism:

Draw a diagram showing cost-Push inflation and explain (reffering to the diagram) why is cost-push inflation considered as worse than demand-pull inflation.

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Diagram:

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Explanation:

Now you already have some idea about causes and consequences of inflation. Let's move on to some important terms related to inflation and to its impacts on our purchasing power.

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period when inflation occured (Format of the answer: Xyz-04 to Xyz-05)

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period when disinflation occured (Format of the answer: Xyz-04 to Xyz-05)

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Period when deflation occured (Format of the answer: Xyz-04 to Xyz-05)

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What is the difference between real income and nominal income?

Explain what happens to your real income (your purchasing power) in each of the following situations 
(p. 278 might be useful)
Format of the answer: increases by x% or decreases by x% or stays unchanged

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your nominal income increases by 5% and the rate of inflation is 8%. Real income:

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your nominal income falls by 10% and the rate of inflation is 3%. Real income:

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your nominal income increases by 5% and the rate of deflation is 3%. Real income:

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Let's start with some consequences of inflation. One of them is redistribution. Redistribution means moving income away from certain groups in the economy towards other groups.

Explain on an example why borrowers tend to be helped by inflation.

Explain using examples who are 'fixed income' earners and why they lose when inflation occurs. Give at least 2 examples other than typical fixed wage-earner (Textbook!).

'When inflation in our country is higher than elsewhere our firms will export less, but imports will be smaller as well, ceteris paribus.' Is it true? Why?

At least one important group that loses during inflation and one that gains are missing in the table. Find them in the textbook and explain why the lose/gain?

Apart from redistribution, there are some other consequences of inflation. The image above refers to one or them which one? Explain the mechanism.

Why inflation leads to uncertainity? Do you agree that this might be considered as the biggest negative consequence of inflation? Why? Why not?

Now we move to CAUSES of inflation. Watch a video of a historical example of demand-pull inflation and answer the questions below:

What are the economic objectives that Kennedy managed to achieve?

What does Vietnam war have to do with the economic situation in the US under Johnson?

Why the author considers social programs under Kennedy as being beneficial for the economy and social programs under Johnson as being detrimental for the economy?

Draw a diagram showing a demand-pull inflation (please label the y-axis better than the author did;).

What does it mean that the economy gets 'overheated'?

What does 'stagflation' stand for?

What were the 2 events in the 70. that contributed to stagflation in th US (and elsewhere)?

Why these events caused inflation - explain the mechanism:

Diagram:

Explanation:

Now you already have some idea about causes and consequences of inflation. Let's move on to some important terms related to inflation and to its impacts on our purchasing power.

period when inflation occured (Format of the answer: Xyz-04 to Xyz-05)

period when disinflation occured (Format of the answer: Xyz-04 to Xyz-05)

Period when deflation occured (Format of the answer: Xyz-04 to Xyz-05)

What is the difference between real income and nominal income?

your nominal income increases by 5% and the rate of inflation is 8%. Real income:

your nominal income falls by 10% and the rate of inflation is 3%. Real income:

your nominal income increases by 5% and the rate of deflation is 3%. Real income:

your nominal income increases from 1000zł to 1070zł and the rate of inflation is 7%. Real income: