The relationship between inflation and spending power, and the impact of inflation on residents inc

The increase in the consumption power of the whole people leads to an increase in demand, and prices rise, and a rise of more than 3% of the average consumption level of the previous year leads to inflation;

Due to inflation, the whole line of goods and goods** has led to a decline in the consumption power of the whole people;

Concise enough, right? Give points quickly, haha.

Inflation, compared to the same period last year, the money to buy relatively less things, may be due to the fact that consumption is too strong and leads to an increase in consumption, resulting in prices**. It may also be that the cost of raw materials increases, resulting in a decrease in the price of goods**, etc. Regardless of the cause, the consequences are the same:

Prices lead to a decrease in consumption, coupled with the increase in raw materials, manufacturers reduce the production and investment of goods, and consumption also decreases in substance, so a vicious circle. If measures are not taken, the economy will collapse.

Inflation is when the physical condition of the market increases, and the amount of money in circulation increases, resulting in the existing price **. When the amount of money in an individual's income does not change, the spending power decreases. When money income is consistent with the inflation coefficient, spending power remains unchanged; When monetary income is greater than inflationary power, spending power increases.

Inflation cannot change the total wealth of a society, but it can change the redistribution of wealth.

Inflation is caused by the imbalance between supply and demand, that is, there are fewer commodities and more people buying, and the price is certainly **, and there are fewer things that you can buy with your original money.

Inflation prices**, the same money buys less and purchasing power decreases.

Inflation is the excessively high price of national income and limited spending power.

Prices** Purchasing power has declined.

Inflation. Impact on Residents' Income and Household Consumption:

1. The level of real income has declined.

2. The income effect of ****.

and substitution effects lead to a reduction in welfare.

3. The income distribution effect of inflation: the specific performance is as follows: the welfare of low-income people (those with less endowment) is impaired, while the high-income people (those with more endowments) can benefit; Those who earn from wages, rent, and interest will suffer from inflation; Those who rely on profit as their main income may make a profit.

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This question is very macroscopic, and there is a lot to be said about in detail. Let's start with the origin of inflation.

Inflation refers to a situation in which the overall level of ** continues to rise. This has two meanings: one refers to the **are** of most commodities on the market; The second refers to the continuous ** of prices, not the ** of the first.

Inflation is generally measured by the price index. According to the different types of commodities included in the calculation of the price index, there are three main price indexes: consumption index (CPI, which measures the level change index of daily necessities and services of named individuals in each period), producer index (PPI, an index that measures the change in the level of products used by producers in the production process in each period), and one is the GDP conversion index (an index that measures the change of all products and services in each period).

Therefore, theoretically, inflation is mainly measured by the price index, which means that the above three indices are an important basis for measuring inflation. (It can also be understood as: consumption and production are the basis for measuring inflation).

At the beginning of inflation, the money supply in the market rises, so the price **, which is the profit ** for enterprises and other producers, so the income increases; However, the price of goods will make the demand for some goods fall, and the consumption level of residents will decline, and all consumption will be restricted.

In the later stage of inflation, because in order to curb inflation, the state will raise interest rates to suppress the supply of money. However, the increase in interest rates also reduces the amount of money that can be invested in the market, so investment will be relatively tight. Moreover, after the interest rate is raised, for companies, the profit margin that they originally obtained due to inflation is gone, so income relative to prices still does not increase.

This is why monetary and fiscal policies adopted to curb inflation often lead to high unemployment and low GDP growth.

Inflation leads to a crazy rise in prices, a decrease in people's consumption, a loss in enterprises, a decrease in workers' incomes, and a decrease in investment!

The more money in the market, the more money it will use for consumption.

That is, inflation is caused by the excessive increase in aggregate demand in the operation of the economy, which exceeds the supply of goods and services at the established level. Demand-pull inflation refers to inflation caused by excessive growth in aggregate demand, ie"Too much money chasing too few goods"According to Keynes, if aggregate demand rises to the point where aggregate supply is greater than aggregate supply, excessive demand can cause a general rise in the price level. In China, fiscal deficits, credit inflation, investment demand inflation and consumer demand inflation often lead to the emergence of demand-pulling inflation in China.

The cause of inflation in our country from 1979 to 1980 was the increase in demand caused by the fiscal deficit.

So, any factor that increases aggregate demand can be a specific cause of demand-pull inflation.

Inflation, generally defined as: under the credit money system, the currency depreciation and price level caused by the amount of money in circulation exceeding the actual needs of the economy are comprehensive and continuous** - in more layman's terms: the price level in a given economy generally and continuously increases, resulting in a continuous decline in the purchasing power of money.

In Keynesian economics, it arises because changes in aggregate supply and demand in an economy lead to a shift in the price level. In monetarist economics, the reason for this is that when the amount of money in circulation in the market increases, the people's monetary income increases, and the purchasing power rises, which affects the price of goods and causes inflation.

The theory is summarized in a very famous equation: MV=PT.

Unlike currency depreciation, overall inflation is a decrease in the value of money in a given economy, while currency depreciation is a decrease in the relative value of money between economies. The former affects the value of the currency for domestic use, while the latter affects the value of the currency in the international market. The correlation between the two is one of the economic controversies.

Inflationary goods refer to "money".

To put it simply, inflation will lead to the depreciation of paper money, and the purchasing power of the money in hand will become lower and lower, and people will of course consume it. in exchange for items.

1 All 1Impact on economic development. Inflationary prices distort the signal, easily lead producers astray in production, lead to the blind development of production, cause abnormal development of the national economy, and deform the industrial structure and economic structure, thus leading to the imbalance of the proportion of the entire national economy.

When the deformity of the economic structure caused by inflation needs to be corrected, the state will inevitably adopt various measures to curb inflation, and as a result, production and construction will drop sharply and the economy will shrink, so inflation is not conducive to the stable and coordinated development of the economy.

2.Impact on income distribution. The inflationary depreciation of the currency has caused the living standards of some residents with lower incomes to continue to decline, making it difficult for the vast number of residents to improve their living standards. When inflation persists, it has the potential to cause social unrest and instability.

3.Impact on foreign economic relations. Inflation will reduce the export competitiveness of domestic products, cause an outflow of foreign exchange reserves, and thus depreciate the exchange rate.