Usually some of us lament that during the child hood days of our father for Rs.1/- we can buy Vegetables required for 1 Week. But now we can buy for that same one rupee not even sufficient for a Sambar ( A liquid gravy used to mix with rice for noon lunch ) once a day. Moreover below Rs.5/- it is almost impossible to purchase anything nowadays.
From the above wordings we can truly realize that the Price hike of all materials would be rising even if we like or Dislike. This price hike is termed by “Inflation” by Experts Worldwide.
In all countries it is denoted in Percentage. If the Inflation is 10% then a material which costs Rs.100/- last year, now to purchase the same material Rs.110/- is required. Many people used to say due to the Inflation hike, Prices had gone up. Actually it is not like that. In turn the price hike had increased the Inflation. Several Essential products price index no: is taken into account and compared with the same period of the previous year and calculated for respective week.
It is called the “Base Period” when the inflation was first formulated. In India for calculating inflation “Whole Sale Price Index – WPI, method is followed. Common public using 435 products are taken into account .These products are called as “Basket of Goods”.
Each product has an Weightage. This weightage, with price hike is being taken into account and WPI calculated. The percentage change is called Inflation.
But in several countries instead of Wholesale price Index they are taking the final cost of price reaching the customer called as “Consumer Price Index”. Even India is trying to change to this.
Inflation rate how affects a particular country and its people must be known to us. Why Essential products and Grandeur products price hike is happening can be researched for understandable. While the cash flow being more, requirement with low (supply ) availability will be present. Since our requirement is more, the production is compared less, to the required quantity, the price hike is happening. Since the materials such as
1. Rice
2. Grams
3. Petrol
4. Dress materials
5. Food items
6. Railways
7. Bus transports
8. Cigarettes
9. Liquors
10. Air travels
11. Real Estates….etc.
For all the above items people are found crowded everywhere. From the above cash flow can be meant as fair. Looking for a good way to explain inflation so that even a child could understand it?
Inflation has been called “The Silent Tax” or stealth tax. Often inflation is explained as something that is just a part of economics and should be accepted. However when you truly understand what it is and what it means you begin to see that it is simply a tool used to enrich those in power of the money supply and tax your money without having a tax.
Here is a quick and easy way to understand how to explain inflation. Often we throw the term inflation around when referring to how much more expensive things are when actually it would be more accurate to say that your money, or even more accurately, your currency is worth less.
When trying to explain inflation to young people you may find it more entertaining to provide visual aides. For this you will need a quarter ($.25) from 1964 or before and a quarter from after 1964.
Now if you had this older quarter in your hand in 1964 you could use it to buy about a gallon of gasoline, because gasoline sold for about 25 cents a gallon give or take a couple of cents. Also if you kept that quarter until today you could sell it for enough money to buy about a gallon of gasoline because the silver in the quarter is worth about the same as a gallon of gasoline today.
This is because the quarter from 1964 and before had at least a 90% silver content. The value of that silver has stayed about the same as in 1964, meaning you could buy about the same stuff with it. However the quarter from after 1964 will not buy as much because its value is not based on its metal content and the supply of them keeps going up.
You should have noticed that the newer quarter has a copper toned ring around the sides. This is because the newer quarter is made of various metals which when melted down would not be worth very much. But since it has been stamped into a quarter we can use it as currency to buy things we want or need that have a price tag of 25 cents or less.
So when the government prints more and more dollars it makes the dollars in your pocket worth less. And since the dollars do not have to be made of anything valuable then they can print more when they need it and after it starts to circulate it makes your dollars worth less, because the more of something there is the less valuable it is right?
From the above wordings we can truly realize that the Price hike of all materials would be rising even if we like or Dislike. This price hike is termed by “Inflation” by Experts Worldwide.
In all countries it is denoted in Percentage. If the Inflation is 10% then a material which costs Rs.100/- last year, now to purchase the same material Rs.110/- is required. Many people used to say due to the Inflation hike, Prices had gone up. Actually it is not like that. In turn the price hike had increased the Inflation. Several Essential products price index no: is taken into account and compared with the same period of the previous year and calculated for respective week.
It is called the “Base Period” when the inflation was first formulated. In India for calculating inflation “Whole Sale Price Index – WPI, method is followed. Common public using 435 products are taken into account .These products are called as “Basket of Goods”.
Each product has an Weightage. This weightage, with price hike is being taken into account and WPI calculated. The percentage change is called Inflation.
But in several countries instead of Wholesale price Index they are taking the final cost of price reaching the customer called as “Consumer Price Index”. Even India is trying to change to this.
Inflation rate how affects a particular country and its people must be known to us. Why Essential products and Grandeur products price hike is happening can be researched for understandable. While the cash flow being more, requirement with low (supply ) availability will be present. Since our requirement is more, the production is compared less, to the required quantity, the price hike is happening. Since the materials such as
1. Rice
2. Grams
3. Petrol
4. Dress materials
5. Food items
6. Railways
7. Bus transports
8. Cigarettes
9. Liquors
10. Air travels
11. Real Estates….etc.
For all the above items people are found crowded everywhere. From the above cash flow can be meant as fair. Looking for a good way to explain inflation so that even a child could understand it?
Inflation has been called “The Silent Tax” or stealth tax. Often inflation is explained as something that is just a part of economics and should be accepted. However when you truly understand what it is and what it means you begin to see that it is simply a tool used to enrich those in power of the money supply and tax your money without having a tax.
Here is a quick and easy way to understand how to explain inflation. Often we throw the term inflation around when referring to how much more expensive things are when actually it would be more accurate to say that your money, or even more accurately, your currency is worth less.
When trying to explain inflation to young people you may find it more entertaining to provide visual aides. For this you will need a quarter ($.25) from 1964 or before and a quarter from after 1964.
Now if you had this older quarter in your hand in 1964 you could use it to buy about a gallon of gasoline, because gasoline sold for about 25 cents a gallon give or take a couple of cents. Also if you kept that quarter until today you could sell it for enough money to buy about a gallon of gasoline because the silver in the quarter is worth about the same as a gallon of gasoline today.
This is because the quarter from 1964 and before had at least a 90% silver content. The value of that silver has stayed about the same as in 1964, meaning you could buy about the same stuff with it. However the quarter from after 1964 will not buy as much because its value is not based on its metal content and the supply of them keeps going up.
You should have noticed that the newer quarter has a copper toned ring around the sides. This is because the newer quarter is made of various metals which when melted down would not be worth very much. But since it has been stamped into a quarter we can use it as currency to buy things we want or need that have a price tag of 25 cents or less.
So when the government prints more and more dollars it makes the dollars in your pocket worth less. And since the dollars do not have to be made of anything valuable then they can print more when they need it and after it starts to circulate it makes your dollars worth less, because the more of something there is the less valuable it is right?
