The Annual Inflation Rate
Just about everything we do as a nation lends to the annual inflation rate. In this article, though, I have chosen four of the most important variables that influence inflation the most. Inflation is the sustained increase in prices, or in other words, a steady decline in the buying power of the dollar. I have come up with an equation that includes the following variables: the unemployment rate, the federal funds interest rate, per capita income, and new home sales. These variables consistently have shown a relationship to the inflation rate and aggregately may help to explain the cause of inflation.The first variable I chose was the unemployment rate. This is the annual average of persons 15 years of age or older, actively seeking and available for work, but unemployed. (BLS). The relationship between unemployment and inflation "provides evidence of a short-run trade-off between the two variables known as the short-run Phillips curve" (BLS). The relationship suggests that by accepting higher inflation levels, the Fed can use monetary policy to stimulate the economy and temporarily reduce unemployment. When prices go up, the wages are affected also. This occurs because if no adjustments
If the houses are built and no one is buying, it does not help the economy. When consumers have and are spending more money, prices will continue to climb. The reasoning here is that if more people are employed and have money, there is more spending, more demand, and therefore prices will rise.
Common topics in this essay:
Inflation Rate,
X3 X4,
inflation rate,
federal funds,
Home Sales,
Price Index,
capita income,
home sales,
annual inflation rate,
unemployment rate,
consumer spending,
annual inflation,
variable chose,
Federal Funds,
funds rate,
hypothesis variable,
John Inflation,
federal funds rate,
Labor Statistics,
rate federal funds,
inflation rate increase,
|
Acceptance Essays
