why is money’s value fiction? economics is organic laws of supply & demand perceived...
TRANSCRIPT
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INFLATIONvs
DEFLATION
… the fiction of money’s value
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Why is money’s value fiction?
•Economics is organic•Laws of Supply & Demand•Perceived value/worth•Inflation & Deflation
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•Definition 1 = The buying and selling of stuff
•Definition 2 = The study of the production, distribution and consumption of goods and services
•Economics is linked to:
Supply & Demand
WHAT IS ECONOMICS ?= Study of Commerce
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SUPPLY & DEMAND
Supply Demand0
1
2
3
4
Surplus
Supply Demand0
1
2
3
4
Equilibrium
Supply Demand0
1
2
3
4Shortage
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Inflation vs Deflation
•Inflation – increase in prices of goods or services over time (Video 2 )
•Deflation – decrease in prices of goods or services over time
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Inflation causes prices to increase, because the value of money decreases
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Hyperinflation•Hyperinflation –
extreme or out of control inflation
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•World Inflation/Deflation rates link
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Deflation
•Deflation – decrease in prices of goods or services over time
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Which is worse?
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Why is Deflation Worse?
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Handout Questions/Definitions
1. Inflation makes the value of money go up/down
2. Deflation makes the value of money go up/down
3. Inflation makes getting a job easier/harder/has no effect
4. Deflation makes getting a job easier/harder/has no effect
5. Which is easier to control: Inflation/Deflation
6. Which is generally more serious: Inflation/Deflation
7. Because: (Deflationary Spiral)
8. Inflation is good for someone Selling/Buying
9. Deflation is good for someone Selling/Buying