  Other
Articles You'd Like...
  Inflation By Alex Weis Ask a knowledgeable investor what he fears the most and the most probable answer you will receive is inflation. Inflation, in simple terms, is the sustained rise of the price of various goods and services. Inflation occurs when actual economic pressures or anticipation of future developments cause the demands for goods and services to exceed the current existing supply at existing prices. Historically, this phenomenon occurs when wars, poor harvests, political upheavals, or other unique events take place. Currently,
investors and economists track inflation through several indexes.
By looking at the consumer price index, investors and economists
are able to see how prices of goods and services have been behaving.
Even though some reports might show a heavy increase in the price
of goods, it doesn't necessarily mean there's rampant inflation.
For example, the CPI takes the price of oil into consideration and
if oil prices are rising, it can skew the CPI upwards. Even though
inflation sometimes leads to short-term temporary gains, inflation
eventually disrupts normal economic activities. Often during an
inflationary period business spending decreases, consumer spending
decreases and stock and bond prices usually depress rapidly.
Previous
Article - Next Article
Like this article?
Bookmark
It
|
