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Types of Inflation Indices - Macroeconomics (ECON-202)

Added on - 04 Jul 2022

The loss in purchasing power of a currency over time is called inflation. A quantitative estimate of the rate at which purchasing power declines can be calculated by examining the increase in average prices of selected goods and services in an economy over time. Generally, a rise in prices is characterized by a declining value of a unit of currency due to an increase in prices as a percentage.

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Macroeconomics (ECON-202)
Virtual Lab Activity 01
Names & ID:
Maha Ali 200108671
Habiba Haggag 200108526
Sumaia Alsadi 200111805
Hasan Bin Abbod 200108928
Reem Almansoori 200116547
Submitted to: Dr. Munshi Afzal
Table of Contents
Different types of inflation indices.............................................................................................3
Study the reasons for and effect of hyperinflation......................................................................3
Causes of hyperinflation in case of Zimbabwe...........................................................................3
Measures taken by central bank to fight hyperinflation.............................................................4
Analysis and Interpretation Part:................................................................................................5
GDP growth in Zimbabwe..........................................................................................................5
Correlation Plot...........................................................................................................................6
Reference:...................................................................................................................................8
Different types of inflation indices
Inflation is the gradual loss of a currency's purchasing power over time. The increase in the
average price level of a basket of selected goods and services in an economy over time can be
used to calculate a quantitative estimate of the rate at which purchasing power declines. A rise
in the general level of prices, which is often expressed as a percentage, means that a unit of
currency now buys less than it did previously. Inflation is distinguished from deflation, which
occurs when money's purchasing power rises while prices fall[ CITATION FER221 \l 1033 ].
[ CITATION Pet213 \l 1033 ]
Study the reasons for and effect of hyperinflation
In 2007, Zimbabwe faced hyperinflation, and one of the main reasons was that they changed
the economic system, but it would benefit them. On the contrary, there was mismanagement
that led to many negative effects, in addition to other reasons, an increase in the money supply
that could be spent, which required more services and goods. In this case, the supply of
services is fixed, but the amount of demand increases, so the prices of goods tend to rise,also
one of the main and important reasons is the war between countries that leads to
hyperinflation.
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