Inflation is a price increase of goods and services after an amount of time in an economy. It usually happens when money is being increased it decreases its value. Inflation is usually measured with the CPI (Consumer price Index) and PPI (Producers Price Index), Consumer Price Index measures the changes in prices between goods and services for a consumer, while Producer Price Index averages the prices between manufacturers. Inflation usually happens when the government overproduces money. When this happens, money loses its value and people need to hold on to more.
CPI is useful for many reasons. Usually the use for it is to provide the changes in price changes the economy and helps everyone make the best economic choices and helps the government make economic policies according to the changes. It also helps stores and business create their prices, hourly wages they pay their employees and the number of employees they want. CPI is important because
The CPI can overstate the basket of goods. One way is substitution bias when prices change due to certain events happening in a certain area numbers don’t change according to the events that happen and they get misrepresented. Another problem that can come up with the CPI is quality bias, usually when CPI measures the basket of goods every year to try and take into account of the new quality is the goods, so the estimation of inflation is over instated as they don’t keep in account how the quality is growing quickly. Outlet bias happens because with all the new online shops the prices of those stores do not measure any online shop, just actual stores. Last but not least there is new product bias and that happens when there are new products given to consumers prices of the goods get less expensive and CPI does not keep that into account.
PPI measures the prices in the point of view of the producer then in the consumer. The PPI is measured and it helps investors to compare the prices of the goods and help them make their decisions. It helps measure the leading Once the PPI is measured it is now put in the CPI and the consumers become aware of prices. The stages of PPI averaging the prices of oils and then it measures the price of goods the manufacturers pay and the price it cost to make goods for consumers and the final price the final good should be. The last stage is where they measure the output of the good.
Inflation causes a lot of problems and could be debated whether it’s a good decision to increase the growth in money or not. Most would say that although in the short run if money is being produced at an increased rate then there will be a higher demand and that can help the economy produce more jobs. Inflation causes an increase of prices over time which then makes money decrease in value.
Deflation is when prices of goods and services decrease. It is also measured by the CPI when the CPI decreases. The CPI as stated before can be miss represented as there is a lot of things that are a factor to it and that it doesn’t take into accounts. It can underestimate the prices because it doesn’t consider the prices of houses but the average amounts a home costs monthly. The prices of houses fluctuate and although the price of houses is high the CPI is low. Deflation has been a problem for a while, there are a few main components that lead to deflation. The first reason is technology, technology is easily attainable and it helps workers making their jobs faster and simpler. Which decreases the amount of jobs. Another reason is
People usually mistaken this for a good thing because the prices in certain goods have decreased, but it can also be bad. The reasons for it are that if there is deflation there may be recession. Prices drop and people don’t buy as much thinking things will continue like this. This usually happens because things are produced in places like China giving the goods and services a very low price and this also causes people to lose their job since those who produces goods then have to produce goods that are lower and lower in price so the people will finally buy it.
Deflation and inflation both have pros and cons and although many people prefer deflation, it can be worse than inflation, because it can decrease the amount of jobs. Inflation makes the value of the dollar decrease as the prices go up, but it can help businesses hire more people. Although that creates more jobs, people have to hold on to more money. Deflation is when prices go down and this is a problem because jobs are decreased.
In this video Hans Rosling explains the growth of countries to health and wealth. He shows us all the countries from 200 years before the year 2007 and shows us the trend of the countries within those years. In the video is showed that our income and life expectancy was very low and was greatly improved within the last 200 years. Although there are so many differences between each country they all were able to slowly raise their life expectancy and wealth.
You can tell that there was a lot a negative impact on the countries where there was a war or some life altering situation happening. It wasn’t until those things ended and some countries became independent until they started prospering. China was not making any improvements while the western cultures were progressing and in the end, some of the countries of China have improved just as much as the wealthiest. I think what Hans Rosling is trying to prove within this video is that with all these modern cultures and improvements that we can all reach a high life expectancy and a lot of wealth. In this from 200 years we had a life expectancy that wasn't longer than 40 and compared to now our life expectancy has risen. Out wealth was also really low and now it’s very high compared to 200 years ago. There is obviously a little more that goes into this study, but the idea Hans Rosling is going for is that it is possible.
Hans Rosling is saying that there is a chance that everyone can reach wealth especially how fast the economy is growing. Industrialization helped the countries become wealthier and healthier while the countries like China and Africa stay down there because they are colonized. The western cultured countries sere improving greatly compared to those that were nonwestern countries. Ones the other courtiers followed and gained their independence they started seeing improvement and getting healthier and wealthier. This graph only shows the averages of the countries but if the countries were split into pieces between states, cities and provinces the difference between one place in the country to a place across can be completely different. That is a part of the problem with what measures the wealth of the people. It averages within countries and it shows that although there the same country these completely different regions can have complete opposite life expectancy and wealth.
In my opinion, an education is really what is going to raise your wealth the most, and maybe a lot of people disagree because in order to get your degree you need to pay for school and get in loads of debts, but I think if you really knew how to work with the educational system you can prosper. On that note, I think there would be a lot of improvements in the education system all over the world. Making the school easier to have access to gives people more degrees, but the more the degrees are out there the less value a degree has. I think that wealth depends in the resources we provide to the people and that it is something we cannot stop improving. If our technology and our world is changing so should our resources and there should be more in different areas.
In conclusion to this video I think Hans Rosling is showing us how the world has improved with life expectancy and wealth and that anyone can achieve it. In the near future, we can improve greatly. Hans Rosling has believed that we can ultimately improve ourselves in the next few years and that’s more so the point he was trying to. The data he had shown only shows the average amount of wealth and life expectancy within those countries, but if we were to separate regions we can see that although the average of the country is doing really well there are some poor and low life expected regions on the data.