How does inflation affect money's ability to store value? (3-6 sentences. 2.0 points) When inflation happens it affects everyone because it lowers the common value of a dollar. Also makes the product cost more than it’s actually worth. Therefor our dollar will not stretch as far as it once did prior inflation.
Below the equilibrium rate? Finally, discuss why is there an inverse relationship between bond prices and interest rates? Explain. a. The LM Curve will see a shift to the left and decrease the value of "Y" if the IR is higher than the ER of the market.
Price inflation causes the value of a dollar to fall over time, and so the same dollar amount in two different years will usually represent different amounts of purchasing power. To counteract this problem, analysts typically adjust dollar figures to account for inflation. Figures that have not been adjusted for inflation are said to be in 'nominal dollars,' while those that have been adjusted are in 'real dollars. Using the nominal dollar does not give the correct short run cost estimaate. Following graph depicts the effect of inflation on cost One of the method firms use for adjusting for inflation is by deflating nominal cost data using an implicit price deflator.
One of the functions of money is as a store of value. How does inflation affect money's ability to store value? (3-6 sentences. 2.0 points) The value of money decreases and you need more money. With inflation the price of products go up.
With your money not tied up in real estate your business can respond to opportunities in the market. In addition, your ability to borrow funds will not be as limited as with buying office space. You don't have to pay the full cost of the asset up front, so you don't use up your cash or have to borrow money. If you have not bought the asset outright, you won't have to worry about any overdraft or other loan taken out to finance the purchase being withdrawn at short notice, forcing early repayment · Easier to qualify. A strong credit rating will not be quite as critical for leasing as it would be for buying.
Assignment 6 (26 points) Assignment 6: Insurance and Consumer Protection Instructions Save this file in your course folder, and name it with Assignment, the section number, and your first initial and last name. For example, Jessie Robinson's assignment for Section 1 would be named Assignment1JRobinson. Type the answers to the assignment questions below. Use complete sentences unless the question says otherwise. You will have more than one day to complete an assignment.
One of the functions of money is as a store of value. How does inflation affect money's ability to store value? (3-6 sentences. 2.0 points) Money makes it much easier to measure the value of a commodity and compare it to others. Without money, it would be difficult for consumers to know which producer was offering the best deal on a certain product.
(3-6 sentences. 2.0 points) Inflation affects the value of money by decreasing the value when prices for both goods and service rise. This ruins money’s ability to store and hold value as it ruins it’s worth. It’s destroys and reduces the current and future value of money. 5.
The opposite occurs for a balance of payments surplus. However, the extent to which this occurs depends on the price elasticity of demand for exports and imports on the Marshall Lerner Condition. This condition states that devaluation (a fall in the value of the currency) will lead to an improvement on the current balance will be seen if the combined elasticities of demand for exports and imports are greater than 1. The size of any J-curve affect in the short run will also affect this extent. The J-curve effect is a short term
Leftward shifts of a downward-sloping demand curve, or decreases in demand, result in lower prices. Such a decrease could be caused by: a fall in income, assuming the good is not inferior; a decrease in the price of a substitute good or an increase in the price of a complimentary good; an expectation of low future prices or of a decrease in income; or a decrease in the number of buyers. Any of these actions in a market would decrease demand, and decrease the equilibrium price. On the other hand, a rightward shift of the demand curve, or an increase in demand, raises the equilibrium price. The opposite changes in the same factors that cause a decrease in demand can result in an increase in demand and an increase in prices.