Income and Purchasing Power

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Income and Purchasing Power
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Inflation and Prices

• Inflation an increase in the general level of
  prices for goods and services
• When prices go up but income does not, buying
  power goes down
• This problems affects both providers and buyers
• Consumer Price Index (CPI) a method of measuring
  inflation with lists and charts

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Current CPI Report of Gas
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(No Transcript)
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Types of Inflation

• Disinflation prices are rising, but slowly
• Reflation prices are high, but drop due to lower
  demand, they go back up when demand increase
  again
• Hyperinflation prices rise so rapidly, they are
  out of control
• Deflation lowering of the overall price levels
• Demand Pull Inflation when consumers want to buy
  more goods and services than producers can supply

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• Cost Push Inflation when producers raise prices
  because their costs goes up
• Real cost inflation as resources diminish or
  become harder to get, prices rise.
• Time Value of Money a concept that says a
  dollar you will receive in the future is worth
  less than a dollar you receive today

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What did it used to cost you? http//www.tvhistory
.tv/193520QF.htm
How much does it cost? http//images.businessweek.
com/ss/06/05/what_things_cost/index_01.htm
NO FREE LUNCH http//moneycentral.msn.com/content/
SavingandDebt/P91802.asp