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Economic and management sciences

Grade 8

Economic cycle

Module 5

Inflation

Assessment standard 1.5:

Inflation

WHEN YOU HAVE COMPLETED THIS SECTION, YOU WILL BE ABLE TO EXPLAIN INFLATION AND THE REASONS FOR FLUCTUATIONS IN THE INFLATION RATE.

  • Inflation is a continuous and considerable INCREASE in the general price level resulting from monetary causes which cause the buying power of money to decrease. It needs to be emphasised that an increase in the price of a single item or the once-only rise in the price of a commodity is not regarded as inflation. For price rises to be qualified as inflation, they have to be of a general nature and cover a wide range of commodities, and they must also be considerable. Such an increase in prices will mean that our money cannot buy as much as it previously could. You will, in fact, be worse off.
  • As inflation implies a general increase in price levels, it is important to analyse reasons for such an increase.
  • Our study of the economic cycle has revealed that the goods stream must always be equal to the currency stream. When the currency stream increases without a simultaneous increase in production/supply of goods, prices will rise because of an increase in the greater demand (resulting from people having more money for purchases.)
  • Consumers purchase the following food items for R100,00
  • 1 bag of potatoes
  • 1 tray of tomatoes
  • 1 bag mealie meal
  • 1 box avocadoes
  • According to the above model, the average price of each of the listed items is R25 (R100 divided by the 4 items). If the currency stream would somehow increase by R60, the average price of the items would rise to R40 per item [(R100 + R60) divided by the same 4 items]. The increase in the amount of money has therefore resulted in a rise in the price.
  • Closely related to this, is the situation where people spend more money on goods and services than the economy is able to provide. In this instance the demand for goods and services rises at a faster rate than the rate at which the units of production are able to deliver their products. This means that prices are forced upward by the greater demand from
  • consumers. The situation in which “more money” chases after “fewer goods” is known as DEMAND-PULL INFLATION.
  • The prices of goods can also rise because of continuous and considerable wage, benefit and tax increases which, for instance, force up the running costs of enterprises or producers. To be able to maintain his profit margins, the producer will simply have to increase the prices of his products.
  • If price increases result from continuous increases in production costs, we have COST PUSH INFLATION, because the increases in running COST place PRESSURE on the selling PRICE and push it UP. Think about the influence of trade unions with their sometimes exorbitant demands for wage increases (i.e. input costs), and the on-going increases in fuel prices (another input cost) because of exchange rate fluctuations.

Activity 1

INFLATION

The information quoted below was published in a newspaper during August 2002. Read the article and answer the questions that follow:

Questions & Answers

Three charges q_{1}=+3\mu C, q_{2}=+6\mu C and q_{3}=+8\mu C are located at (2,0)m (0,0)m and (0,3) coordinates respectively. Find the magnitude and direction acted upon q_{2} by the two other charges.Draw the correct graphical illustration of the problem above showing the direction of all forces.
Kate Reply
To solve this problem, we need to first find the net force acting on charge q_{2}. The magnitude of the force exerted by q_{1} on q_{2} is given by F=\frac{kq_{1}q_{2}}{r^{2}} where k is the Coulomb constant, q_{1} and q_{2} are the charges of the particles, and r is the distance between them.
Muhammed
What is the direction and net electric force on q_{1}= 5µC located at (0,4)r due to charges q_{2}=7mu located at (0,0)m and q_{3}=3\mu C located at (4,0)m?
Kate Reply
what is the change in momentum of a body?
Eunice Reply
what is a capacitor?
Raymond Reply
Capacitor is a separation of opposite charges using an insulator of very small dimension between them. Capacitor is used for allowing an AC (alternating current) to pass while a DC (direct current) is blocked.
Gautam
A motor travelling at 72km/m on sighting a stop sign applying the breaks such that under constant deaccelerate in the meters of 50 metres what is the magnitude of the accelerate
Maria Reply
please solve
Sharon
8m/s²
Aishat
What is Thermodynamics
Muordit
velocity can be 72 km/h in question. 72 km/h=20 m/s, v^2=2.a.x , 20^2=2.a.50, a=4 m/s^2.
Mehmet
A boat travels due east at a speed of 40meter per seconds across a river flowing due south at 30meter per seconds. what is the resultant speed of the boat
Saheed Reply
50 m/s due south east
Someone
which has a higher temperature, 1cup of boiling water or 1teapot of boiling water which can transfer more heat 1cup of boiling water or 1 teapot of boiling water explain your . answer
Ramon Reply
I believe temperature being an intensive property does not change for any amount of boiling water whereas heat being an extensive property changes with amount/size of the system.
Someone
Scratch that
Someone
temperature for any amount of water to boil at ntp is 100⁰C (it is a state function and and intensive property) and it depends both will give same amount of heat because the surface available for heat transfer is greater in case of the kettle as well as the heat stored in it but if you talk.....
Someone
about the amount of heat stored in the system then in that case since the mass of water in the kettle is greater so more energy is required to raise the temperature b/c more molecules of water are present in the kettle
Someone
definitely of physics
Haryormhidey Reply
how many start and codon
Esrael Reply
what is field
Felix Reply
physics, biology and chemistry this is my Field
ALIYU
field is a region of space under the influence of some physical properties
Collete
what is ogarnic chemistry
WISDOM Reply
determine the slope giving that 3y+ 2x-14=0
WISDOM
Another formula for Acceleration
Belty Reply
a=v/t. a=f/m a
IHUMA
innocent
Adah
pratica A on solution of hydro chloric acid,B is a solution containing 0.5000 mole ofsodium chlorid per dm³,put A in the burret and titrate 20.00 or 25.00cm³ portion of B using melting orange as the indicator. record the deside of your burret tabulate the burret reading and calculate the average volume of acid used?
Nassze Reply
how do lnternal energy measures
Esrael
Two bodies attract each other electrically. Do they both have to be charged? Answer the same question if the bodies repel one another.
JALLAH Reply
No. According to Isac Newtons law. this two bodies maybe you and the wall beside you. Attracting depends on the mass och each body and distance between them.
Dlovan
Are you really asking if two bodies have to be charged to be influenced by Coulombs Law?
Robert
like charges repel while unlike charges atttact
Raymond
What is specific heat capacity
Destiny Reply
Specific heat capacity is a measure of the amount of energy required to raise the temperature of a substance by one degree Celsius (or Kelvin). It is measured in Joules per kilogram per degree Celsius (J/kg°C).
AI-Robot
specific heat capacity is the amount of energy needed to raise the temperature of a substance by one degree Celsius or kelvin
ROKEEB
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Source:  OpenStax, Economic and management sciences grade 8. OpenStax CNX. Sep 11, 2009 Download for free at http://cnx.org/content/col11040/1.1
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