Educacion Publica En Mexico
Páginas: 3 (631 palabras)
Publicado: 2 de diciembre de 2012
“The price movement” and “Inflation”
The concept of cost is the most important in economics because it tells us what the value of things.
Suppose a weight is needed to buy an orange and it takestwo to buy an apple. then the apple is worth double the orange, but if there was a flood that destroyed the crops of oranges, probably its little value would increase, say to four pesos. if applescost the same then the oranges would be worth twice as apples. the only thing that changed was the relative price of oranges and apples, ie the value of an orange compared to an apple.
Relative pricesof goods and services in a constantly changing economy. When a product becomes more abundant its value against other goods and services tends to decrease. When it becomes relatively scarce itsrelative value to other goods and services tends to increase
On the other hand if we have increasingly more money, then we will want to buy more. but if there are no more goods and services to offset theincrease in money, we would have more demand for the same amount of product, which would cause prices to rise. It is said that there is a general and steady increase of prices that is inflation.Inflation is dangerous for the economy for several reasons:
When inflation low income people are less likely to save their money and earn interest
The worst thing is that the interest you pay alsoincrease.
Cash loses value because you do not receive an interest to compensate for inflation.
Is it better then no to mint coins or print more bills?
The important thing is to grow the amount ofgoods and services and increase the amount of money so you have enough to share without the general price level increase of more.
Why not allowing there be more goods and services without beingmore money to bring prices down?
* Because this phenomenon called DEFLATION is also dangerous for the economy.
INFLATION means that prices of goods and services generally rise and constant....
The concept of cost is the most important in economics because it tells us what the value of things.
Suppose a weight is needed to buy an orange and it takestwo to buy an apple. then the apple is worth double the orange, but if there was a flood that destroyed the crops of oranges, probably its little value would increase, say to four pesos. if applescost the same then the oranges would be worth twice as apples. the only thing that changed was the relative price of oranges and apples, ie the value of an orange compared to an apple.
Relative pricesof goods and services in a constantly changing economy. When a product becomes more abundant its value against other goods and services tends to decrease. When it becomes relatively scarce itsrelative value to other goods and services tends to increase
On the other hand if we have increasingly more money, then we will want to buy more. but if there are no more goods and services to offset theincrease in money, we would have more demand for the same amount of product, which would cause prices to rise. It is said that there is a general and steady increase of prices that is inflation.Inflation is dangerous for the economy for several reasons:
When inflation low income people are less likely to save their money and earn interest
The worst thing is that the interest you pay alsoincrease.
Cash loses value because you do not receive an interest to compensate for inflation.
Is it better then no to mint coins or print more bills?
The important thing is to grow the amount ofgoods and services and increase the amount of money so you have enough to share without the general price level increase of more.
Why not allowing there be more goods and services without beingmore money to bring prices down?
* Because this phenomenon called DEFLATION is also dangerous for the economy.
INFLATION means that prices of goods and services generally rise and constant....
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