6 Things to Know About Inflation

By Connor Williams & Chrystian Noble

What Is It?

Inflation is the comparison of the amount of money it take to buy something in two years. It can also be said as the comparison between the value of money in two set times. With moderate rates of inflation comes a healthy economy.

Can We Measure It

Inflation can be and is measured. We do so by using the CPI. CPI is the Consumer Price Index, which is the measure of price change in certain products. However it can be deceitful so be aware.

Pros VS. Cons?

Pros

Inflation helps grow the economy. This is due to the slight changing prices and increase in wages and prices. An increase of inflation can also reduce the real value of debt.

Cons

If the economy inflates over 3%, it can hurt the economy. This is due to the lack of value of the dollar after inflation. The companies can’t increase the prices and wages before severe inflation happens

What Does Inflation Effect?

Inflation affects the value of currency. For example one day a product could be low priced and shoot up the next day. The reason for this is because of inflation, if the government brings more money into the economy then the value of it as the nation’s currency decreases.

How To Make A Profit Off Of It

Inflation not only devalues a nation’s currency it raises interest rates. If you have a CD in a bank or a bond you can use this to your advantage by taking it out and putting it back in the bank to gain the new and higher interest rate. However be conscious of giving loans, your total value of what you loaned will have decreased.

Guaranteed Inflation Can Be Both Helpful And Harmful