سؤال قراءة ستيب محلول — فهم التفاصيل (تدريب 5544)

(1) Inflation is when most prices in an entire economy are rising. However, there is an extreme form of inflation called hyperinflation. This occurred in Germany between 1921 and 1928, and more recently in Zimbabwe between 2008 and 2009. In November 2008, Zimbabwe had an inflation rate of 79.6 billion percent. In contrast, in 2014, the United States had an average annual rate of inflation of 1.6%. Zimbabwe’s inflation rate was so high it is difficult to comprehend, so let’s put it into context. It is equivalent to price increases of 98% per day. This means that, from one day to the next, prices essentially double. (2) What is life like in an economy afflicted with hyperinflation? Most of you reading this will have never experienced this phenomenon. The government adjusted prices for commodities in Zimbabwean dollars several times each day. There was no desire to hold on to currency since it lost value by the minute. The people there spent a great deal of time getting rid of any cash they acquired by purchasing whatever food or other commodities they could find. At one point, a loaf of bread cost 550 million Zimbabwean dollars. Teachers’ salaries were in the trillions a month; however, this was equivalent to only one U.S. dollar a day. (3) At its height, it took 621.984.228 Zimbabwean dollars to purchase one U.S. dollar. Government agencies had no money to pay their workers, so they started printing money to pay their bills rather than raising taxes. Rising prices caused the government to enact price controls on private businesses, which led to shortages and the emergence of black markets where prices rose as fast as the Government printed more money. In 2009, the country abandoned its currency and allowed people to use foreign currencies for purchases. The value of foreign currencies did not change much, so prices in foreign currencies were steadier. This helped reduce the hyperinflation. (4) How does this happen? How can both the government and the economy fail to function at the most basic level? Before we consider these extreme cases of hyperinflation, let’s first look at inflation itself. (5) Inflation is a general and on-going rise in the level of prices in an entire economy. Inflation does not refer to a change in relative prices. A relative price change occurs when you see that the price of tuition has risen, but the price of laptops has fallen. Inflation, on the other hand, means that there is pressure for prices to rise in most markets in the economy. In addition, price increases in the supply-and-demand model were one-time events, representing a shift from a previous equilibrium to a new one. Inflation implies an on-going rise in prices. If inflation happened for one year and then stopped, then it would not be inflation anymore. (6) The most commonly cited measure of inflation in the United States is the Consumer Price Index (CPT). Government statisticians at the U.S. Bureau of Labor Statistics calculate the CPI based on the prices in a fixed basket of goods and services that represents the purchases of the average family of four. In recent years, the statisticians have paid considerable attention to a subtle problem: that the change in the total cost of buying a fixed basket of goods and services over time is conceptually not quite the same as the change in the cost of living, because the cost of living represents how much it costs for a person to feel that his or her consumption provides an equal level of satisfaction or utility. To understand the distinction, imagine that over the past 10 years, the cost of purchasing a fixed basket of goods may be a misleading measure of how your cost of living has changed. (7) Alternatively, imagine that people are utterly indifferent to whether they have peaches or other types of fruit. Now, if peach prices rise, people completely switch to other fruit choices and the average price of food does not change at all. A fixed and unchanging basket of goods assumes that consumers are locked into buying exactly the same goods, regardless of price changes, not a very likely assumption. Thus, substitution bias the rise in the price of a fixed basket of goods over time tends to overstate the rise in a consumer’s true cost of living, because it does not take into account that the person can substitute away from goods whose relative prices have risen. (8) The other major problem in using a fixed basket of goods as the basis for calculating inflation is how to deal with the arrival of improved versions of older goods or altogether new goods. Consider the problem that arises if a cereal is improved by adding 12 essential vitamins and minerals and also if a box of the cereal costs 5% more. It would clearly be misleading to count the entire resulting higher price as inflation, because the new price reflects a higher quality (or at least different) product. Ideally, one would like to know how much of the higher price is due to the quality change, and how much of it is just a higher price.