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What the meaning of inflation in the currency?

What the meaning of inflation in the currency?

Inflation is the steady increase in the level of the total price. The runaway inflation is very high. Although initially arbitrary, but economists usually reserve the term "hyper-inflation" to describe cases where the monthly inflation rate greater than 50%. When the monthly average of 50%, the thing that was costing $ 1 in January, will cost $ 130 in the month of January of the following year.
How it can cause inflation? There is no single shock, regardless of severity, it can be interpreted in a steady rise in prices (accelerated continuously). World wars themselves were not the cause of inflation. Destruction of resources during the wars can explain why prices may be higher than it was before, but the war itself cannot explain the reason that could push prices to rise rapidly and continuously during periods of hyperinflation.

Hyperinflation is caused by very rapid growth in the provision of paper currency. It happens when the fiscal and monetary authorities of the state to issue large amounts of money to pay for the flow of large government expenditures. In fact, it is a form of taxation, where the government Gain on individuals who keep money to the falling dollar account. It is, therefore, impose a very large tax programs.
In hyperinflation, prices are growing faster than the stock of money, because people are trying to reduce the purchasing power that keep them in the form of money. And trying to avoid the inflation tax by maintaining their wealth in the form of material goods. And while they buy such goods, rising prices and accelerating inflation.

What the meaning of inflation in the currency?

Hyperinflation tends to be self-sustainability. Assuming that the government is committed to funding expenditures through the issuance of money and began to raise the share capital by 10% per month. The inflation rate will rise, for example, by 10% per month. Government market notes that it is no longer able to buy the same amount of money issued by and is likely to respond by increasing money growth even further. And begin a series of hyper-inflation. Through it, there will be a tug between the public and the government. The audience is trying to spend the money they get it quickly in order to avoid the inflation tax, and the government are given higher inflation and higher rates of issuance of money.
How hyperinflation ends? The standard answer is that the government should have to play with the obligations of reliable to reduce the rapid growth in the money stock. Supporters of this principle shall take into account the end of hyperinflation in Germany as one of similar cases. 19 823 at the end of the year, Germany has implemented monetary reforms through the establishment of a new unit of currency dubbed "Rientemark." The German government has promised that the new currency can be turned into bonds upon request to have a certain amount of gold. Supporters standard Answer argue that the security transfer may be considered a promise halt the rapid release of the money.
What are the effects of hyperinflation? One of its effects, which has serious consequences is the re-allocation of wealth. The hyperinflation transfer of wealth from the public, which keeps money to the government, which is issuing the money. It also causes the gain for borrowers to the lenders account when the loan contracts signed by the worst stages of inflation. Business, which owns stores of raw materials and goods to win the public account. In Germany, earning tenants at the expense of landlords rent because the roof did not maintain the same pace with the level of prices. "Costantino Briskyana-TURRÓN" says he destroyed the revolution sedentary groups in Germany and made it easier for "national socialists" (the Nazis) to obtain power.
Hyperinflation reduces the efficiency of the economy by paying agents away from financial transactions and close to barter. In a normal economy, it is getting large efficiency through the use of money in the exchanges.
During hyperinflation, people prefer payment in goods in order to avoid the inflation tax. If the payment was made to use the money, they are to be spent as soon as possible. Workers in Germany were getting wages twice a day and they were directly shopped to avoid further reductions in the value of their earnings. Hyperinflation is a game devastating "hot potato" where individuals using precious resources in trying to avoid keeping money paperwork.

What the meaning of inflation in the currency?

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