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Understanding Inflation and its effects on the Dollar

Learn about inflation and how it impacts the value of dollars. Discover the formula to calculate inflation and understand its effects on prices. Explore examples of high inflation countries.

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Understanding Inflation and its effects on the Dollar

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  1. Inflation:Dollars Losing Value

  2. INFLATION: Increases in Price Level • Inflation (on an annual basis) is the percent change in the average price level for the year Monthly Inflation = 100% x (CPI now – CPI last month)/ CPI last month Annualized = x 12

  3. Effects of Inflation • Effects of inflation: • $10 item after 1 year of inflation @ • 2% = $10.20 • 10% = $11 • 100% = $20 • 1000% = $110 • 10,000% = $1100 • 1 million % = • Formula is P*(1 + decimal inflation rate)

  4. U.S. Inflation Since 1960

  5. HIGH INFLATION COUNTRIES (cia world fact book) Uzbekistan 12% 2012 est. Uganda 19% 2012 est. Guiena 15% 2012 est. Venezuela 26% 2012 est. Sudan 31% 2012 est. South Sudan 79% 2012 est. Belarus 59% 2012 est. Zimbabwe 26,470 2007 est.

  6. Factors influencing inflation: Supply and Demand for Money

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