Describe the deflation and analyze the associated costs

Assignment Help Econometrics

Reference no: EM131126699

"During periods of inflation, people use real resources to reduce their holdings of fiat money. Such activities produce a private benefit with no corresponding social gain, which illustrates the social cost of inflation." Explain this quotation and give an example. 3. Unanticipated deflation also produces serious social costs. For each of the following, describe the deflation and analyze the associated costs:

a. During the Great Depression, prices of major crops fell along with the prices of other commodities. What would happen to farmers who had large mortgages?

b. Japan experienced a mild deflation in the 1990s. Assume that Japanese students each borrowed 2,000,000 yen (about $20,000) to pay for their education, hoping that inflation would allow them to pay off their loans in inflated yen. What would happen to these students if wages and prices began to fall at 5 percent per year?

Reference no: EM131126699

Questions Cloud

Abc that relate to the financial services industry : An article in Cost Management, by Kocakulah, Bartlett, and Albin entitled "ABC for Calcu- lating Mortgage Loan Servicing Expenses" (July/August 2009, p. 36), discusses a use of ABC in the financial services industry.

As the manager of an aeropostale store : Two of your friends, Chuck and Joan, have been dating for a year. Chuck earns $3,000 per month as the manager of an Aeropostale store. Joan is a sophomore in college and is not currently working.

Write a more complete product design specification : What other information would be required to be able to write a more complete Product Design Specification and design a suitable rack that can be made using Fred's materials and equipment.

Using managerial accounting information : 2. By evaluating the cost of leftover materials, the plant manager of a precision tool facility wishes to determine how effectively the plant is being run.

Describe the deflation and analyze the associated costs : What would happen to these students if wages and prices began to fall at 5 percent per year?

Although medical association : Although a medical association has concluded there is no topical product which can restore hair to those bald for over twenty years, a product manufacturer's advertisement states its topical product can "restore hair to those bald for 40 years." The ..

How issues relating to the dignity of the human person : Write an Op-Ed (opinion-editorial) piece that allows you to demonstrate an understanding of how issues relating to the dignity of the human person and the realization of the common good may be addressed by you in your professional practice now and..

About harassment by supervisor from another agency : A woman hired as a prison librarian complained about harassment by a supervisor from another agency that operated at the prison. The behavior that was the subject of her complaint, some of which was witnessed by other employees, oc- curred about four..

What conclusion can you draw from your graphical analysis : Use your knowledge of economic principles to discuss how the market premise operates under the "polluter-pays principle."

User Account

All Pages