AP Macroeconomics 1.2 Measurement of Economic Performance
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AP Macroeconomics 1.2 Measurement of Economic Performance. What is inflation?
AP | AP Macroeconomics |
AP Macroeconomics | Basic Economic Concepts Financial Sector Measurement of Economic Performance Open Economy |
Language | English Language |
Transcript
is inflation Well not sure what it is Okay specifically
it is a rate at which the prices on goods
and services increase Usually yes but on an annualized basis
Well this holiday season when your grandmama's ask her what
she paid for her house This one the one she
bought fifty two years ago The one with the bathroom
door knob that it always falls off Yet she bought
it for eight grand about what you pay now for
a six year old prius The house would sell today
for three hundred grand Why That part of town suddenly
get more valuable No not at all It's the same
It increased in value at the same rate as inflation
So it's real value is about the same as it
was back Lynn fifty two years ago An average worker
made a thousand bucks a year Today that same average
Worker makes thirty seven point five grand a year And
guess what The home back then sold for eight times
the average worker's salary And well guess what Today it
sells for eight times the average worker's salary Right back
to the answer Inflation is an increase in prices not
just a change So is out See really foreign currency
How about asking if it refers to the sound loose
skywalker's lightsaber makes when he turns on the power random
All right d increased purchasing power No the opposite If
you have lots of inflation a dollar goes less far
than it used to Remember that wheelbarrow full of german
marks right there their currency back then before the euro
it used to take one of those paper bills to
buy a loaf of bread and inflation struck and well
you know start eating stagflation No it's Not about breeding
kentucky derby winners Stagflation refers to a specific element of
inflation where prices go up But employment does not And
yeah it's a bad thing unlike the breeding scenario Okay
so that's it The answer is b increase in prices
we dread the day that balloons will eventually cost twenty 00:02:21.603 --> [endTime] Bucks Each that's really gonna burst our bubble