MONETARY POLICY

AND CENTRAL BANK

TOPIC:
WHAT IS INFLATION
WHAT IS INFLATION
by: Avelia Villahermosa

INFLATION- is an increase in the

level of prices of the goods and
services that household buy. It is
measured as the rate of change
those prices. Such as the increase
in the cost of living in a country.
INFLATION-
In economic inflation is a general increase in
the prices of goods and services in an
economy. When the general price level rises,
each unit of currency buys fewer goods and
services; cosequently, inflation corresponds
to a reduction in the purchasing power of
money.
 WHAT ARE THE EFFECTS OF
INFLATION
by: Apple Kaye Sumimbal
Inflation- can affects the economy in
several ways.
For examle, if inflation causes a nation’s
currency to decline, this can be benefit
exporters by making their goods more
affordable when price in the currency of
foreign nations.
 What are the main causes of
inflation
by: Kenneth Socorin
1.Demand-pull- inflation occurs
when the demand for goods and
services in the economy exceeds
the economy’s ability to produce
them.
2.Cost-push- inflation occurs
when the rising price of input
goods and services.
3. BUILT- in inflation- which is occurs
when workers demand higher wages to
keep up with rising living costs. This in
tuern causes businesses to raise thier
prices inorder to offset their rising wage
costs, leading to a self-reinforcing loo of
wage and price increases.
 How to Protect Against Inflation
Some ways to protect against inflation:
by: Jolina Tacling
• Lock in low fixed interest rates: a 30 year
mortgage at a low fixed interest rate is protected
against inflation. Look to borrow when interest rates
are low and consider refinancing when rates drop
• Invest in stocks: stock markets tend to do relatively
better than bondsin a high-inflation environment , as
many companies end up passing on higher cost to
consumers, which proyects profits.
• Buy inflation: protected securities:
some financial products are linked to
inflation, such as Treasury Inflation-
Protected Securities or TIPS, which adjust
in price to offset inflation. Some permanent
life insurance products and annuities may
also have an option to be adjusted for
inflation, often in the form of cost of living
adjustment (COLA) rider.
 How to Protect Against Inflation
by: Elpedio Pepito
• Save at high interest rates: use high interest rates to
save money in money market accounts or CDs at more
favorable yields. Not, however, that if the yield proves
to be lower than the rate of inflation, you’ll still lose
buying power
• Buy an inflation hedge: certain assets like gold and
real estate are tought to be good hedges against
inflation, increasing in value along with a general rise in
prices
• Own rental estate: when inflation hits, landlords can
often raise the rent to keep pace.
 MEASURES OF INFLATION
by: Kin Toy Zamora
CONSUMER PRICE INDEX (CPI)
It measusres prices for a basket of goods and
services in the economy, including food,
cars,education,and recreation.It is a meas
PRODUCER PRICE INDEX (PPI)
is the one who reports the price changes that affect
domestic producers. The PPI measures prices for
fuel, farm products, and metals.
 ADVANTAGES AND
DISADANTAGES OF INFLATION
ADVANTAGES OF INFLATION-
by: Izielle Jane Saraus
1. Deflation (a fall in prices-negative)
2. Moderate inflation enables adjustments of
wages
3. Inflation enables adjustment of relative
prices
 DISADVATAGES OF INFLATION
by: Irene Salem and Edlouie Ursal
1. Inflationary growth tends to be
unsustainable
2. Inflation tends to discourage and long-
term economic growth
3. Inflation can make an economy
uncompetetive
4. Reduce the value of savings
The End
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