ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Inflation
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Depreciation
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Either A or B
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None of the above
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Detailed explanation-1: -In other words, inflation is a measure that causes the prices of both goods and services to rise over time and buyers will feel the pinch as it affects their personal finance, particularly spending and buying habits.
Detailed explanation-2: -Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.
Detailed explanation-3: -During the observation period from 1960 to 2021, the average inflation rate was 3.8% per year. Overall, the price increase was 829.57%. An item that cost 100 dollars in 1960 costs 929.57 dollars at the beginning of 2022. For January 2023, the year-over-year inflation rate was 6.4%.
Detailed explanation-4: -Based on speed, there are 4 different types of inflation – hyperinflation, galloping, walking, and creeping.
Detailed explanation-5: -Example: if petrol prices increase much more than the prices of other goods and services, people who use a car frequently may “feel” a rate of inflation that exceeds the HICP because their personal expenditure on petrol is higher than average.