HOW DOES INFLATION AFFECT CONSUMERS PART XIV

WALKING INFLATION IS WHEN PRICES GO UP 3-10% ANNUALLY. ANY PERCENTAGE BETWEEN THE GIVEN NUMBERS COULD DO AS LONG AS IT FORCES PEOPLE TO START STOCK SAVING IN THE ANTICIPATION OF FURTHER INCREASE IN PRICES. THIS LEADS TO A HIGH DEMAND IN STOCK BUT A SHORTAGE IN SUPPLY WHICH INCREASES THE PRICE FURTHER FOR MORE PROFIT. 

GALLOPING INFLATION IS WHEN PRICES INCREASE BY 10% OR MORE ANNUALLY. THIS IS DEVASTATING FOR AN ECONOMY AS IT DRIVES OUT FOREIGN INVESTORS. ONE REASON FOR IT IS THE FLUCTUATIONS IN THE VALUE OF THE CURRENCY. INFLATION IS MEASURE ON A CONSUMER PRICE INDEX (CPI). THIS INDEX NOTES THE INCREMENT CR A DECREMENT OF PRICES OVER A SHORT OR LONG PERIOD OF TIME. CPI DOESN’T MEASURE EVERYTHING IN THE SAME BRACKET. FOR EXAMPLE, WHILE THE PRICES OF VEGETABLES OR FRUITS MAY BE THE SAME OR FACE A SMALL INCREMENT OVER TIME, THE PRICES OF FUEL REMAIN ERRATIC. 

THEY SOMETIMES FACE AN INCREMENT OR A DECREMENT DEPENDING ON THE GEO-POLITICAL SCENARIOS OF THE SAID TIME. UNCONTROLLED INFLATION ALMOST ALWAYS HAS AN ADVERSE EFFECT ON THE ECONOMY OF A PERONWHO HAS A SALARY OF RS100,000 COULD GET HIS HOUSE IN ORDER BY SPENDING AROUND RS75,000 ON NECESSITIES OF LIFE AND STILL SAVE AROUND RS25,000. BUT AS INFLATION HITS THE MARKET, FOR EXAMPLE, THE PRICE OF PETROL PER LITRE INCREASES, NOW THE PERSON HAS TO PAY MORE TO GET THE SAID LITRE OF PETROL, BUT THE OTHER BASIC ACCOMMODATES OF LIFE GET EXPENSIVE AS WELL. TRANSPORTATION COSTS GET HIGHER WHICH LEADS TO FOOD GETTING MORE EXPENSIVE BECAUSE IT’S MORE EXPENSIVE NOW TO TRANSPORT THE VEGETABLES AND THE FRUITS FROM THEIR FARMS TO THE SHOPS AND STORES.

THUS CHAIN OF EVENTS CONTINUES AND BASICALLY CREATES A HUGE BURDEN ON THE ECONOMY OF A CONSUMER WHO COULD AFFORD TO BE LAVISH BEFORE BUT NOW HAS TO BE CAREFUL IN ORDER TO SAVE FOR  THE VERY XBOX HE WAS SAVING THAT’S COINCIDENTALLY ALSO HAS GOTTEN A BIT MORE EXPENSIVE. NOW, THE EVENT MENTIONED ABOVE IS A BIGGIE FOR A CONSUMER BELONGING TO A HIGHER CLASS BUT INFLATION BECOMES A HUGE HEADACHE TO MIDDLE AND LOWER MIDDLE CLASS FAMILIES WHO JUST BARELY MAKE DO WITH THE INCOME THEY GET. SO TO PUT IN GENERAL TERMS, INFLATION BASICALLY RAISES THE COST OF LIVING. WHAT IT ALSO DOES IS INCREASE THE POVERTY IN A COUNTRY. 

NOW THERE ARE MORE CHILDREN WHO GO TO SLEEP HUNGRY BECAUSE THEIR FATHER WHO WAS BARELY ABLE TO BRING BREAD AND BUTTER HOME AFTER A DAY’S HARD EARNED PAY COULD NOT AFFORD TO DO SO ANYMORE. IN ONE WAY OR ANOTHER, INFLATION IS A FACE OF LIFE. IT AFFECTS US ALL, THE CONSUMERS AND INVESTORS BOTH, AS BOTH ARE EFFECTED BY THE RISING PRICES OF RAW MATERIALS.

EFFECTS OF INFLATION ON DIFFERENT SECTS OF SOCIETY ARE OVEN BELOW.

DEBTORS AND CREDITORS WITH RISING INFLATION, DEBTORS HAVE A MAJOR GAIN WHILE CREDITORS FACE LOSE LOSSES. MONEY FACES DEVALUATION DUE TO RISING INFLATION AND THUS THE DEBTORS EASILY RETURN THE MONEY WHICH IS NOW HAVING LESS VALUE IN TERMS OF GOOD. THE REASON BEING THAT THE VALUE IS NOW LESS THAN THE TIME THEY BORROWED IT.

SIMILARLY, DUE TO DEVALUATION

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HOW DOES INFLATION AFFECT CONSUMERS PART XIII

REAL LIFE USES AND APPLICATIONS REGRESSION ANALYSIS HAS VERY HIGH IMPORTANCE IN VARIOUS DISCIPLINES SUCH AS BUSINESS, ECONOMIC, ENGINEERING AND BIOLOGICAL SCIENCES FOR PREDICTED VARIOUS OUTCOMES AS A RESULT OF VARIOUS OF BUSINESS THERE ARE TWO PRIMARY USES FOR REGRESSION WHICH ARE STATED BELOW, PREDICTED THE FUTURE TO PREDICT A CERTAIN EVENT THAT IS YET TO OCCUR FOR EXAMPLE THE DEMAND OF A CERTAIN PRODUCT IN THE NEAR FUTURE OR THE ESTIMATED SALES EXAMINE THE RELATIONSHIP BETWEEN TWO OR MORE VARIABLE, THE DEPENDENT (PREDICTOR) AND THE INDEPENDENT (RESPONSE) VARIABLE, AND THEN STUDIED WHY THIS METHOD IS WIDELY USED FOR PREDICTING OR ESTIMATING THE OUTCOMES IN VARIOUS FIELDS. 

PLUS, WE HAVE ALSO WENT THROUGH STEP BY STEP METHOD TO USING THIS METHOD TO FURCATE THE FUTURE DEMAND OF THE PRODUCT AND LASTLY WE HAVE DISCUSSED SOME OF ITS MANY APPLICATIONS AND BENEFITS THAT ARE BEING USED IN WIDE NUMBER OF FIELDS. FINALLY, WE CAN CONCLUDE THAT REGRESSION ANALYSIS IS SO FAR CONSIDERED THE BEST TECHNIQUE FOR PREDICTING THE OUTCOME OF VARIOUS MODELS AND 18 TODAYS MANAGERS BELIEVES IT TO BE AN INDISPENSABLE TOOL. 

REFERENCES HTTP://WWW.PURCHASES MARTER.COM/ARTICLES/119 HTTP://BLOGSPOT.COM/201482REGRESSION-METHOD-0DEMAND-FORECASTING.HML

REGRESSION-ANALYSIS-BUSINESS-77200.HTML HTTP://BIOLOGY.QUEENSU.CR/

ACADEMICS/UNDERGRADUATE/RESOURCES-FOR-COURSES/ANALYZING-DATA/CORRELATION-AND-REGRESSION/EACH YEAR WE HAVE THAT THE PRICES OF THE GOODS AND SERVICES GET HIGHER. THE PRICE OF PETROL IN 2008 WAS AROUND RS80 IN 2013, AFTER AROUND 5YEARS, THE PRICE HAD RISEN TO RS105. THIS ANNUAL (OR MONTHLY DEPENDING ON HOW WE MEASURE IT) INCREASE IS KNOWN AS INFLATION TO UNDERSTAND THE EFFECTS OF INFLATION ON CONSUMER, WE MUST FIRST GET INTO WHAT INFLATION REALLY IS.

INFLATION IS THE SUSTAINED INCREASE IN THE PRICES OF GOODS AND SERVICES IN AN ECONOMY OVER A PERIOD OF TIME. IF COULD BE AN INCREMENT MEASURED MONTHLY OR YEARLY. IT USUALLY HAS A VERY REVERSE EFFECT ON THE ECONOMY OF A PERSON AND A COUNTRY.

THERE ARE 5 TYPES OF INFLATION, HYPERINFLATION, ASSET INFLATION, CREEPING INFLATION, WARNING INFLATION AND GALLOPING INFLATION. HYPERINFLATION IS THE WORST TYPE. IT’S WHEN PRICES RISE MORE THAN 50% A MONTH. IT’S VERY RARE BUT IT HAS HAPPENED. SINCE MOST OF THE ECONOMIES ARE NOT FULLY BACKED BY EITHER GOLD OR SILVER, THE ECONOMIES ARE THEN RUN ON FLAT MONEY, WHICH MAKES IT EASIER TO MANIPULATE INFLATION DUE TO SEVERAL REASONS MOTIVATED EITHER POLITICALLY OR ELSE. ONE SUCH EXAMPLE IN HISTORY COULD BE IN THE FORM OF INDONESIA OR GERMANY. IN 1928S, GERMANY WAS STRUCK BY HYPERINFLATION. 

SINCE GERMANY HAD LOST THE WORLD WAR 1, THE VICTORIOUS NATIONS ASKED IT FOR COMPENSATION OF THE LOSSES THEY FACED DURING THE WAR AT THE HANDS OF THE GERMAN. THE GERMS COULDN’T PAY THEM BACK IN GERMAN CURRENCY BECAUSE OF ITS SUSPECT DUE TO PREVIOUS MASS BORROWING SO THE GERMANS MASS PRINTED THE THEIR PAPER NOTES WHICH LED TO A DEVALUATION OF THEIR CURRENCY WHICH IN TURN LED TO HYPERINFLATION IN THEIR COUNTRY. ASSET INFLATION IS THE MILDEST AND OCCURS VERY OFTEN. 

ONE SUCH EXAMPLE COULD BE THAT THE PRICES OF VEGETABLES AND FRUITS SO UP EVERY YEAR. THIS IS DUE TO THE ANTICIPATION OF RISING DEMAND. CREEPING INFLATION IS WHEN PRICES RISE BY A FIXED AMOUNT ANNUALLY. IT’S SOMEWHAT COMMON. HOWEVER, THE LAST TIME IT OCCURRED WAS IN 2007.

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HOW DOES INFLATION AFFECT CONSUMERS PART XII

ADDING EXTRA VARIABLES THAT HAS NEGLIGIBLE AFFECT OR NO EFFECTS WILL MAKE YOUR ANALYSIS COMPLICATED AND TOO MUCH WORK SO TIS KEPT SIMPLE. STEP 2   PAST DATA COLLECTIONS ONCE YOU HAVE YOUR VARIABLES SET AND DETERMINED THE NEXT IMPORTANT STEP IN THE PROCESS IS THE COLLECTION OF THE PAST DATA. THE DATA THAT SHOULD BE GATHERED MUST BE WITH RESPECT TO THE VARIABLES THAT YOU HAVE DETERMINED OR SET. THE DATA COLLECTION CAN BE DONE IN TWO DIFFERENT UNIQUE WAYS DESCRIBED BELOW FIRSTLY, IT CAN BE COLLECTED WITH RESPECT TO THE POPULATION IN TERMS OF INCOME, PRICES, AND ETC. FOR VARIOUS TIME PERIODS ALSO IN CAN BE COLLECTED WITH RESPECT TO INCOME AND PRICES FOR THE DIFFERENT REGIONS OF THE MARKET FOR A PARTICULAR TIME PERIOD. 

REMEMBER THAT FREQUENCY OF THE DATA COLLECTED CAN BE OF VARIOUS PERIODS SUCH AS FOR A MONTH, HALF A YEAR OR A YEAR OR SO, BUT THE REGULARITY OF THE FREQUENCY IS IMPORTANT AND IT SHOULD BE MAINTAINED, FOR EXAMPLE IF THE DATA COLLECTED IS FOR EVERY OTHER YEAR OR SO IT IS BEST TO KEEP ON COLLECTING THE DATA YEAR WISE AND NOT TO SHIP ANY YEAR. STEP 3 SELECTION OF THE DEMAND FUNCTION AFTER SETTING THE VARIABLES AND THE COLLECTION OF PAST DATA, THE NEXT STEP BEFORE FINALLY COMPILING EVERYTHING IS TO DETERMINE THE COMPLETE DEMAND FUNCTION. WHICH IS THE DEPENDENT OR THE VARIABLE THAT IS TO BE PREDICTED. THE FACTORS THAT EFFECT THIS ARE THE VARIABLES THAT WERE DEFINED IN THE FIRST STEP. THE DEMAND FUNCTION CAN BE OF LINEAR OR IN LOGARITHMIC FORM, BOTH OF THEM ARE DISCUSSED INDIVIDUALLY BELOW.

LINEAR INVOLVES FINDING THE LINE OF BEST FITS BETWEEN TWO OR MORE VARIABLES, THUS BY INPUTTING ONE OR MULTIPLE VARIABLES OTHER VARIABLE CAN BE PREDICTED, USING A LINEAR EQUATION. NOW CONSIDERING THE FUNCTION FORMED ABOVE IN STEP 1 AND DETERMINING ITS DEMAND FUNCTION IN THE LEANER EQUATION FORM BELOW, ZDA = M0+M1PZ+M2Y+M3A+M4PS+M5PC WHERE, M1, M2, M3, M4 AND M5 ARE THE REGRESSION COEFFICIENTS. THESE COEFFICIENTS REPRESENT THE ELASTICITY OF DEMAND ALSO INCLUDE PRICE ELASTIC, INCOME ELASTIC, PROMOTIONAL ELASTICITY AND CROSS ELASTICITY OF DEMAND.

THESE COEFFICIENTS ARE RESPONSIBLE FOR THE AMOUNT OF CHANGE AS WELL AS THE NATURE OF THE CHANGE (POSITIVE OR NEGATIVE) FOR EXAMPLE IN THE ABOVE EQUATION EFFECT OF INCOME, ADVERTISEMENT AND SUBSTITUTE WILL HAVE A POSITIVE EFFECT ON THE DEMAND, WHEREAS THE PRICE OF COMMODITY A MIGHT HAVE A NEGATIVE EFFECT ON THE FUTURE DEMANDS OF IT. THEN COMES THE POLYNOMIAL FORMS IN WHICH THE RELATIONSHIP IS NOT A STRAIGHT LINE, NEVER THE LESS THEY CAN BE CONVERTED INTO A STRAIGHT LINE BY TRANSFORMING THE VARIABLE USING LOGARITHMS INTO A STRAIGHT LINE FOR SIMPLICITY, IT IS MOST COMMONLY USED IN META MODELS FOR MECHANICAL SYSTEMS. 

STEP 4 FUNCTION ESTIMATION THIS IS THE MOST IMPORTANT STEP IN WHICH THE COEFFICIENT VALUES ARE FOUND, THESE COEFFICIENTS EACH REPRESENTS THE MEAN CHANGE IN THE RESPONSE VARIABLE FOR ONE UNIT OF CHANGE WHILE KEEPING THE OTHER VARIABLES CONSTANT. THESE CAN BE EASILY DETERMINED USING THE SOFTWARE USED FOR PLOTTING THE REGRESSION ANALYSES GRAPH OR MANUALLY STANDARDIZING EACH VALUES. IT IS ESSENTIAL TO REMEMBER THAT THE VALUES OF THESE COEFFICIENT CANNOT BE MORE THAN ONE, ALWAYS <1.

STEP 5 FORECAST DERIVATION THE LAST RAD THE FINAL STEP IS DERIVING THE FORECAST USING YOUR PREDICTED VALUES FOR THE COEFFICIENTS AND YOUR FUNCTION. IN THIS STEP YOU CAN ESTIMATE THE VALUES OF INCOME, PRICES, PRICES OF RELATED SUBSTITUTED, PROMOTIONAL EXPENDITURES ETC. FOR THE UPCOMING TIME USING THIS REGRESSION METHOD.

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HOW DOES INFLATION AFFECT CONSUMERS PART XI

STEP 3 SELECTING OF THE DEMAND FUNCTION AFTER SETTING THE VARIABLES AND THE COLLECTION OF PAST DATA, THE NEXT STEP BEFORE FINALLY COMPILING EVERYTHING IS TO DETERMINE THE COMPLETE DEMAND FUNCTION. WHICH IS THE DEPENDENT OR THE VARIABLE THAT IS TO BE PREDICTED.

THE FACTORS THAT EFFECT THIS ARE THE VARIABLES THAT WERE DEFINED IN THE FIRST STEP. THE DEMAND FUNCTION CAN BE OF LINEAR OR IN LOGARITHMIC FORM, BOTH OF THEM ARE DISCUSSED INDIVIDUALLY BELOW. LINEAR INVOLVES FINDING THE LINE OF BEST FITS BETWEEN TWO OR MORE VARIABLES, THUS BY INPUTTING ONE OR MULTIPLE VARIABLES OTHER VARIABLE CAN BE THESE COEFFICIENTS ARE RESPONSIBLE FOR THE AMOUNT OF CHANGE AS WELL AS THE NATURE OF THE CHANGE (POSITIVE OR NEGATIVE) FOR EXAMPLE IN THE ABOVE EQUATION EFFECT OF INCOME, ADVERTISEMENT AND SUBSTITUTE WILL HAVE A POSITIVE EFFECT ON BETWEEN THE OVEN TEMPERATURE AND SHELF LIFE OF COOKIES BAKED IN THOSE OVEN OR A COMPANY OPERATING A CALL CENTER MAY WISH TO KNOW THE RELATIONSHIP BETWEEN THE WAIT TIMES OF CALLERS AND THE NUMBER OF COMPLAINS THAT THEY RECEIVE STRENGTH CAN BE PREDICTED AND ANALYZED USING DIFFERENT FACTORS, WHEREAS IN BIOLOGICAL SCIENCE MEASURING THE BODY MASS AND COX ENZYME ACTIVITY IN A SAMPLE OF FEW DIFFERENT SPECIES OF SMALL MAMMALS ARE ALL DONE USING THIS EXACT SAME METHOD.

BY USING REGRESSION ANALYSIS IN VAST NUMBER OF DISCIPLINES IT BECOMES EASIER TO PREDICT AND ESTIMATE THE BEHAVIOR OF THE STRUCTURES OR FORECAST THE DEMANDS OF A PRODUCT, THIS METHOD HELPS GENERATE ACCURATE RESULTS AND ANALYZE THE FACTORS EFFECTING IT DIRECTLY OR INDIRECTLY BY SUMMARIZING LARGE NUMBER OF DATA AND CALCULATING THE RESULTS, WHICH FOR IN SOME CASES ARE OF HIGH IMPORTANCE AND CAN CHANGE THE OUTCOME OF THE ORGANIZATIONS.

CONCLUSION AND SUMMERY IN THIS ARTICLE WE HAVE DISCUSSED ABOUT REGRESSION ANALYSES AND SEEN HOW IT IS USED TO EXAMINE THE RELATIONSHIP BETWEEN TWO OR MORE VARIABLE, THE DEPENDENT (PREDICTOR) AND THE INDEPENDENT (RESPONSE)VARIABLE, AND THEN STUDIED WHY THIS IS WIDELY USED FOR PREDICTING OR ESTIMATING THE OUTCOMES IN VARIOUS FIELDS. PLUS, WE HAVE ALSO WENT THROUGH STEP BY STEP METHOD TO USE FAR CONSIDERED THE BEST TECHNIQUE FOR PREDICTING THE OUTCOME OF VARIOUS MODELS AND IS TODAYS MANAGERS BELIEVES IT TO BE AN INDISPENSABLE TOOL.

REFERENCES HTTP://WWW.PURCHASESMARTER.COM/ARTICLES/119 HTTP://LEARNECOMOMICSONLYBIOLOGY..QUEENSU.CA/RCADEMICS/UNDERGRADUCATE/RESOURCES-FOR-COUSES/ANALYZING-DATA/CORRELATION-AND-REGRESSION/ ,ZDA = F(PZ, Y, A, PS, PC) WHERE, ZDA = DEMAND FOR COMMODITY A PRICE OF COMMODITY A (PZ) CONSUMER INCOME (Y) ADVERTISING EXPENDITURE INCURRED ON COMMODITY Z (A) PRICES OF SUBSTITUTE (PS) PRICES OF COMPLEMENT (PC) NOTE THAT THESE VARIABLES CAN HAVE BOTH POSITIVE AND NEGATIVE EFFECTS ON THE DEMAND THAT IS EXPLAINED THAT ARE TO BE SELECTED SHOULD HAVE A SIGNIFICANT IMPORTANCE ON THE DEMAND THAT COMMODITY AND WHEREAS THE USE OF TOO MANY VARIABLES AND UNIMPORTANT FACTORS SHOULD BE OVERLOOKED, BELOW IS AN EXAMPLE OF WHAT’S STATED ABOUT WHEN A CERTAIN BRAND OF CLOTHING IS PREDICTING THE DEMAND OF THEIR PERSONAL PRODUCT FACTORS LIKE WEATHER CONDITIONS, AND PEOPLE’S INCOME PLAY AN IMPORTANT ROLE IN THE ANALYSIS. ASIDE FROM THAT IF A HIGH PRICED COMMODITY LIKE HOUSING IS CONSIDERED THEN FACTORS SUCH RS CREDIT ACCOUNTS AND INTEREST PLAY A VITAL ROLE.

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HOW DOES INFLATION AFFECT CONSUMERS PART X

WHICH IS SLIGHTLY ADVANCED IN TERMS OF CALCULATIONS AND DATA COLLECTIONS BUT IS CONSIDERED TO BE THE MOST ACCURATE FOR PREDICTIONS. ALL THE ESTIMATIONS ARE BASED ON THE PAST DATA AVAILABLE AND THE FACTORS THAT ARE INFLUENCING IT DIRECTLY OR INDIRECTLY. STEPS FOR REGRESSION ANALYSIS NOW LET’S GO OVER THE STEPS THAT ARE INVOLVED IN REGRESSION ANALYSIS METHOD ONE BY ONE.

STEP 1 DETERMINING THE VARIABLES IS THE VERY FIRST STEP WHICH INVOLVES THE DETERMINATION OR RECOGNITION OF YOUR VARIABLES BASED ON WHICH THE FORECASTING WILL BE DONE. LET’S CONSIDER AN EXAMPLE OF A COMMODITY A AND STATE ITS VARIABLES IN TERMS OF ITS DEMAND FUNCTION BELOW REGRESSION ANALYSIS TERMINOLOGY STARTING WITH THE TERM REGRESSION ANALYSIS, IT IS A STATISTICAL PROCESS USED FOR FINDING OUT OR ESTIMATING THE RELATIONSHIP BETWEEN ONE OR MORE INDEPENDENT/PREDICTOR VARIABLES AND THE INDEPENDENT/RESPONSE VARIABLE.

INDEPENDENT/PREDICTOR VARIABLE THAT WE ARE TRYING TO PREDICT WHERE AS DEPENDENT/RESPONSE IS THE ONE THAT IS EFFECTING IT DIRECTLY OR INDIRECTLY MULTIPLE REGRESSION ANALYSIS INVOLVES MULTIPLE AVAILABLE WHICH IS SLIGHTLY ANNOUNCED IN TERMS OF CALCULATIONS AND DATA COLLECTIONS BUT IS CONSIDERED TO BE THE MOST ACCURATE FOR PREDICTIONS. ALL THE ESTIMATIONS ARE BASED ON THE PAST DATA AVAILABLE AND THE FACTORS THAT ARE INFLUENCING IT DIRECTLY OR INDIRECTLY. STEPS FOR REGRESSION ANALYSIS NOW LET’S GO OVER THE STEPS THAT ARE INVOLVED IN REGRESSION ANALYSIS METHOD ONE BY ONE.

STEP 1 DETERMINING THE VARIABLES IS THE VERY FIRST STEP WHICH INVOLVES THE DETERMINATION OR RECOGNITION OF YOUR VARIABLES BASED ON WHICH THE FORECASTING WILL BE DONE. LET’S CONSIDER AN EXAMPLE OF A COMMODITY AND STATE ITS VARIABLES IN TERMS OF ITS DEMAND FUNCTION BELOW. ZDA =F(PZ, Y, A, PS, PC) WHERE, ZDA = DEMAND FOR COMMODITY A PRICE OF COMMODITY A (PZ)CONSUMER INCOME (Y) ADVERTISING EXPENDITURE INCURRED ON COMMODITY DEMAND THAT IS EXPLAINED LATER IN THE BELOW STEPS KNOWING HOW TO SELECT YOUR VARIABLES FOR THE DEMAND FUNCTION IS VERY IMPORTANT, THE VARIABLE THAT ARE TO BE SELECTED SHOULD HAVE A SIGNIFICANT IMPORTANCE ON THE DEMAND THAT COMMODITY AND WHEREAS THE USE OF TOO MANY VARIABLES AND UNIMPORTANT FACTORS SHOULD BE OVERLOOKED, BELOW IS AN EXAMPLE OF WHAT’S STATED ABOVE WHEN A CERTAIN BRAND OF CLOTHING IS PREDICTING THE DEMAND OF THEIR SEASONAL PRICED COMMODITY LIKE HOUSING IS CONSIDERED THEN FACTORS SUCH RS CREDIT ACCOUNTS AND INTEREST PLAY A VITAL ROLE.

ADDING EXTRA VARIABLES THAT HAS NEGLIGIBLE AFFECT OR NO EFFECTS WILL MAKE YOUR ANALYSIS COMPLICATED AND TOO MUCH WORK SO IT’S KEPT SIMPLE. STEP 2 PAST DATA COLLECTIONS DONE YOU HAVE YOUR VARIABLES SET AND DETERMINED THE NEXT IMPORTANT STEP IN THE PROCESS IS THE COLLECTED OF THE PAST DATA. THE DATA THAT SHOULD BE GATHERED MUST BE WITH RESPECT TO THE VARIABLES THAT YOU HAVE DETERMINED OR SET. THE DATA COLLECTION CAN BE DONE IN TWO DIFFERENT UNIQUE WAYS DESCRIBED BELOW FIRSTLY, IT CAN BE COLLECTED WITH RESPECT TO THE POPULATION IN TERMS OF INCOME, PRICES, ETC. FOR VARIOUS TIME PERIODS.

ALSO CAN BE COLLECTED WITH RESPECT TO INCOME AND PRICES FOR THE DIFFERENT REGIONS OF THE MARKET FOR A PARTICULAR TIME PERIOD. REMEMBER THAT FREQUENCY OF THE DATA COLLECTED CAN BE OF VARIOUS PERIODS SUCH AS FOR A MONTH, HALF A YEAR OR A YEAR OR SO, BUT THE REGULARITY OF THE FREQUENCY IS IMPORTANT AND IT SHOULD BE MAINTAINED, FOR EXAMPLE IF THE DATA COLLECTED IS FOR EVERY OTHER YEAR OR SO IT IS BEST TO KEEP ON COLLECTING THE DATA YEAR WISE AND NOT TO SHIP ANY YEAR.

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HOW DOES INFLATION AFFECT CONSUMERS PART IX

THERE ARE TWO TYPES OF CURVES THAT DEFINES THE AGGREGATE SUPPLY SHORT-RUN AGGREGATE SUPPLY (SRAS) FOR ONE ORGANIZATION TO INCREASE ITS PRODUCTIVITY WITHOUT HAVING TO DO IT ALL FROM THE START, AND SECOND IS LONG-RUN AGGREGATE (LRAS) THAT IS USED FOR INVESTING IN SOMETHING NEW AND SETTING UP THE STRUCTURE.

THE SRAS CURVE IS POSITIVELY SLOPED AND DEFINES THE ONE-TO-ONE RATIO BETWEEN THE PRICE LEVEL AND REAL PRODUCTION, WHEREAS THE LRAS INDICATING THAT THE REAL PRODUCTION IS INDEPENDENT OF THE PRICE LEVEL. WHEN THESE CURVES ARE CONSTRUCTED THE DETERMINANTS OF THE AGGREGATE SUPPLY ARE ASSUMED CONSTANT. THESE DETERMINANTS CAN HAVE A DIRECT EFFECT ON BOTH THE CURVES OR ON ONE DEPENDING ON THE DETERMINANT FOR EXAMPLE FLOW OF NET INVESTMENT THAT YIELDS PRODUCTIVITY WILL EFFECT BOTH OF THEM AND CAUSE THE AGGREGATE SUPPLY TO SHIFT RIGHT.

WHEREAS THE HURDLES IN RAW MATERIAL ON TEMPORARY BASIS DUE TO WEATHER CONDITIONS OR DELAYS DUE TO TRAFFIC THAT EFFECTS THE PRODUCTION EFFECTS THE SRAS WHEREAS THE LRAS WILL REMAIN CONSTANT. ALSO ON THE BASIS OF CHANGES IN THE EXPECTATIONS OF THE INFLATION, SRAS MIGHT SHIFT TO THE LEFT IF THE PRODUCERS BELIEVE THAT THEY CAN SELL IT IN THE FUTURE FOR MORE PROFITS NOT EFFECTING THE LRAS.

AGGREGATE SUCH “EMPLOYEES”, IT IS A PERSON OR A GROUP OF PERSONS EMPLOYED FOR WAGES OR SALARY AT AN ORGANIZATION, ESPECIALLY AT NON-EXECUTIVE LEVEL. NUMBER OF EMPLOYEES AND THEIR WAGES PLAY AN IMPORTANT ROLE IN DETERMINING THE AGGREGATE SUPPLY OF NATION. LET’S START BY CONSIDERING A FACT THAT AGGREGATE SUPPLY WILL INCREASE WITH THE ABILITY TO PRODUCE MORE BY THE PRODUCERS, SO THUS HAVING LARGE NUMBER OF EMPLOYEES COULD RESUME IN THE GROWTH OF THE AGGREGATED SUPPLY, HOWEVER, CONSIDERING THE SECOND FACTOR THEIR WAGES IF THEY ARE BEING PAID HIGHLY OR THE WAGES EXPENSES OF COMPANY ARE HIGHER THAN THE PRICE OF THE PRODUCTION AND THE OUTPUT WILL TO THE DECREASE IN THE PRODUCTION OF THE SUPPLY.

SO IT CONSIDERED TO BE THE BEST STRATEGY BY THE ORGANIZATION TO EMPLOYEE REQUIRED NUMBER OF PEOPLE ON MODERATE WAGES TO CUT DOWN PRODUCTION COST AND INCREASE THE SUPPLY, THUS BETTER AGGREGATE SUPPLY BY SPENDING LESS. AND LASTLY CONSIDERING THE FACTOR THAT THE INCREASE OF TECHNOLOGY HAS AUTOMATED MOST OF THE PROCESSES AND DUE TO WHICH THE AGGREGATED SUPPLY HRS INCREASE OVERALL AND IS THE UNEMPLOYMENT BUT BETTER SUPPLY.

WE HAVE DISCUSSED ABOUT WHAT THE AGGREGATED SUPPLY IS AND THE MAJOR GOODS AND FACTORS AFFECTING IT AND CAN EASILY SAY THAT AGGREGATE SUPPLY IS THE ABILITY OF A COUNTRY TO PRODUCE AND FOR IN ORDER TO MEET THE REQUIREMENT AND INCREASING THE CAPITAL. REGARDING THE EMPLOYEES, IT IS TRUE TO SAY THAT THE NUMBER OF EMPLOYEES WORKING AND THEIR WAGES EFFECT THE AGGREGATE SUPPLY DIRECTLY AND DEPENDING ON HOW THEY ESPECIALLY IN ABUNDANCE CAN PROVE LESS BENEFICIAL AS COMPARED TO THE FEW HANDFULS THAT ARE REQUIRED FOR IN ORDER TO PRODUCE MORE AND KEEPING THE DEMANDS OF THE PRODUCT HIGH FOR FUTURE PRODUCTIONS.

REFERENCES HTTP://WWW.ECONOMICSONLINE.CO.UK/MANAGING_THE_ECONOMY/AGGREGATE+SUPPLY.HTML

HTTP://WWW.TUTOR2U.NET/ECONOMICS/REFERENCE/AGGREGATE-SUPPLY HTTP://WWW.AMOSWEB.COM/CGI-BIN/AWB_NAV.PL?S=WPD&H=AGGREGATE+SUPPLY+DETERMINANTS

HTTP://STUDY.COM/ACADEMY/LESSON/AGGREGATE-SUPPLY-IN-THE-ECONOMY-DEFINITION-AND-DETERMINANTS.HTML

HTTP://WWW.INVESTOPEDIA.COM/EXAM-GUIDE/CFA-LEVEL-1/MACROECONOMICS/AGGREGATE-SUPPLY-DEMAND.ASP

THERE ARE TWO TYPES OF CURVES THAT DEFINES THE AGGREGATE SUPPLY SHORT-RUN AGGREGATE SUPPLY (SRAS) FOR ON ORGANIZATION TO INCREASE ITS PRODUCTIVITY WITHOUT HAVING TO DO IT ALL FROM THE START, AND SECOND IS LONG-RUN AGGREGATE (LRAS) THAT IS USED FOR INVESTING IN SOMETHING IN SOMETHING NEW SETTING UP THE STRUCTURE.

THE SRAS CURVE IS POSITIVELY SLOPED AND DEFINES THE ONE-TO-ONE RATIO BETWEEN THE PRICE LEVEL AND REAL PRODUCTION, WHEREAS THE LRAS INDICATING THAT THE REAL PRODUCTION IS PRODUCTION IS INDEPENDENT OF THE PRICE LEVEL. WHEN THESE CURVES ARE CONSTRUCTED THE DETERMINANTS OF THE AGGREGATE SUPPLY ARE ASSUMED CONSTANT. THESE DETERMINANTS CAN HAVE A DIRECT EFFECT ON BOTH THE CURVES OR ON ONE DEPENDING ON THE ON THE DETERMINANT FOR EXAMPLE FLOW OF NET INVESTMENT THAT YIELDS PRODUCTIVITY WILL EFFECT BOTH OF THEM AND CAUSE THE AGGREGATE SUPPLY OF SHIFT RIGHT.

WHEREAS THE HURDLES IN RAW MATERIALS ON TEMPORARY BASIS DUE TO EITHER CONDITIONS OR DELAYS DUE TO TRAFFIC THAT EFFECTS THE PRODUCTION EFFECTS THE SRAS WHEREAS THE LRAS WILL REMAIN CONSTANT. ALSO ON THE BASIS OF CHANGES IN THE EXPECTATIONS OF THE INFLATION, SRAS MIGHT SHIFT TO THE LEFT IF THE PRODUCERS BELIEVE THAT THEY CAN SELL IT IN THE FUTURE FOR MORE PROFITS NOT EFFECTING THE LRAS. AGGREGATE “EMPLOYEES”, IT IS A PERSON OR A GROUP OF PERSONS EMPLOYED FOR WAGES OR SALARY AT AN ORGANIZATION, ESPECIALLY AT NO-EXECUTIVE LEVEL.

NUMBER OF EMPLOYEES AND THEIR WAGES PLAY AN IMPORTANT ROLE IN DETERMINING THE AGGREGATE SUPPLY OF A NATION. LET’S START BY CONSIDERING A FACT THAT AGGREGATE SUPPLY WILL INCREASE WITH THE ABILITY TO PRODUCE MORE BY THE PRODUCERS, SO THUS HAVING LARGE NUMBER OF EMPLOYEES.

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HOW DOES INFLATION AFFECT CONSUMERS PART VIII

ABSTRACT WE WILL START THIS ARTICLE BY DEVELOPING A CLEAR UNDERSTANDING OF THE TERMS AGGREGATE SUPPLY AND EMPLOYMENT STARTING OFF WITH AGGREGATE SUPPLY TO UNDERSTAND ITS TERMINOLOGIES AND THE FACTORS THAT ARE RESPONSE INCLINE OR DECLINE, ALONG WITH AGGREGATE SUPPLY CURVE AND UNDERSTANDING IT, THEN COMING THE TERM “EMPLOYEES” AND WHO ARE THEY BEFORE CONCLUDING EVERYTHING WE WILL DRAW A CLEAR CUT RELATIONSHIP BETWEEN AGGREGATE SUPPLY ON THE EMPLOYEES. STARTING WITH THE TERM AGGREGATE SUPPLY (AS) IT IS DEFINED AS THE TOTAL AMOUNT OF GOODS AND SERVICES (REAL OUTPUT) PRODUCED AND SUPPLIED BY AN ECONOMY’S FIRMS OVER A PERIOD OF TIME.

IT OTHER WORDS IT IS MEASURE OF VOLUME OF GOODS AND SERVICES PRODUCED EACH YEAR. THIS SUPPLY REPRESENTS THE ABILITY OF A CERTAIN ECONOMY TO PRODUCE AND DELIVER GOODS AND SERVICES TO MEET THE DEMAND.

IT CAN ALSO BE SAID THAT IS THE MEASURE OF ONE’S STATE OR NATION’S ABILITY TO PRODUCE GOODS AT EVERY PRICE LEVELS THAT IS USUALLY DESCRIBED IN A GRAPHICAL FORM. THE COMPONENTS (GOODS) THAT AGGREGATE SUPPLY CONSISTS OF ARE CONSUMER’S GOODS PRIVATE CONSUMER GOODS PRIVATE CONSUMER GOODS LIKE MOTOR VEHICLES, CLOTHES AND ENTERTAINMENT ARE SUPPLIED BY PRIVATE SECTOR. FOR A DEVELOPED ECONOMY THIS THE SINGLE LARGEST COMPONENT OF THE AGGREGATED SUPPLY.

CAPITAL GOODS SUCH AS MACHINERY EQUIPMENT AND PLANTS ARE SUPPLIED TO VARIOUS FIRM, THESE ARE SIGNIFICANT FOR IN ORDER TO INCREASE IN ECONOMY ABILITY TO SUPPLY GOODS TO THE PRIVATE SECTORS. PUBLIC AND MERIT GOODS GOOD AFTER GOING THROUGH THE TYPES OF GOODS THAT ARE INCLUDED IN THE AGGREGATED SUPPLY LETS GO OVER THE MAJOR FACTOR THAT AFFECTS THE AGGREGATED SUPPLY ALSO KNOWN AS “CETRIS PARIBUS”  THAT DEFINES THE NATIONS/STATE SUPPLY ARE THE PRICE OF THE GOODS, HAVING A MEASURE EFFECT ON THE SUPPLY OF A CERTAIN GOODS RELATED TO THEIR DEMANDS, FOR EXAMPLE IF THE PRICE OF A COMMODITY IS TOO HIGH ITS DEMAND WILL CERTAINLY BECOME LOW, SIMILARLY IF THE PRICE WILL ALSO BE MORE, THUS THE COMMODITY HAVING THE HIGHEST DEMAND WILL BE PRODUCED IN ABUNDANCE RELATIVE TO THE ONE HAVING LESSER DEMAND.

THE MORE THE PRODUCTION THE MORE THE INCREASE IN THE NATIONS AGGREGATED SUPPLY ARE THE PRICE OF LABOR FORCE, LABORS ARE A CRUCIAL PART OF ANY ORGANIZATION WITHOUT WHICH THE PRODUCTION CAN BE COMPLETELY PARALYZED, HOWEVER HAVING MORE LABORS DOESN’T ALWAYS MEAN THAT THE COMPANY WILL PROSPER IN ITS HAVING EXTRA WORK FORCE IS ALWAYS BETTER AND IT INCREASES THE OVERALL PRODUCTION, THUS IN TURN INCREASING THE OVERALL SUPPLIES BUT THE WAGES OF THE LABOR ALSO COMES INTO PLAY IF THE COMPANY STARTS OVER HIRING PEOPLE THEY WILL ALSO HAVE TO PAY EXTRA AND WILL HAVE TO RESORT TO INCREASING THE PRICE OF THEIR SUPPLY TO MEET THE EXPENSES.

PAYING MORE EXTRA WAGES IS ALSO NOT GOOD AS IT ALSO DECREASES PRODUCTION AND INCREASES EXPENSE, SO EVERY THEIR SUPPLY, WHICH BENEFICIAL FOR THE OVERALL AGGREGATED SUPPLY. PRICE OF INPUT, THE COST OF RAW MATERIALS LIKE STEEL, IRON ETC. OR THE EXPENSE OF ENERGY AND GRS REQUIRED FOR IN ORDER TO MANUFACTURE A CERTAIN PRODUCT ALSO PLAYS A KEY ROLE IN DETERMINING THE OUTPUT OF A SUPPLY, FOR EXAMPLE IF THE COST OF RAW MATERIAL IS HIGH SO DOES THE COST OF PRODUCTION THUS LIMITING PRODUCTION, BUT WHEREAS IF FOR SOME REASON THE COST OF RAW MATERIAL LIKE OIL AND FUEL DECREASES THUS IN THAT CASE THE PRODUCTION WILL INCREASE BECAUSE OF THE LOW PRODUCTION COST.

THUS IT STATES THAT THE HIGHER THEN TECHNOLOGY, THIS IS ONE OF THE MOST IMPORTANT FACTORS IN ITSELF AND CAN HAVE A SIGNIFICANT INCREASE IN THE SUPPLY DEPENDING ON THE ADVANCEMENTS AND IMPROVEMENTS IN THE OVERALL EFFICIENCY OF THE PRODUCTION. HAVING NEWER TECHNOLOGY IN PLAY NOT ONLY INCREASES THE OVERALL EFFICIENCY BUT ALSO REDUCES THE WORK TIME FOR PRODUCTION THUS INCREASING SUPPLIES, ALSO USING TECHNOLOGY MANY PROCESSES CAN BE AUTOMATED CUTTING DOWN LABOR COST AND INCREASING PRODUCTION. THUS WE CAN SAY THAT AN INTRODUCTION OF NEWER MUCH MORE ADVANCEMENT IN TECHNOLOGY IS ALWAYS GOOD FOR INCREASING THE AGGREGATED SUPPLY.

THE VALUE OF CAPITAL STOCK, IT IS THE AMOUNT OF MONEY AVAILABLE IN AN ECONOMY FOR IN ORDER TO INVEST IN BUSINESS TO PURCHASE THE NECESSARY ITEMS USED FOR PRODUCING GOODS AND RESELLING THEM FOR FUTURE PROFITS, THUS MULTIPLYING THE CAPITAL STOCKS. USING A CAPITAL STOCK, THE PRODUCING BUSINESS CAN INVEST IN BUYING MORE EFFICIENT MACHINERIES AND PAY FOR MORE WORKERS FOR IN ORDER TO INCREASE THEIR PRODUCTIONS.

 HAVING A GOOD CAPITAL STOCK IS THE AIM OF EVERY ECONOMY TRYING TO PROSPER, WITHOUT WHICH THE INVESTMENT GOES DOWN AND PRODUCTION SLOWS. SO IN SHORT KEEPING A GOOD CAPITAL STOCK FOR INVESTMENTS IS NECESSARY FOR INCREASE IN AGGREGATE SUPPLY FOR A NATION, AS IT DECREASES SO DOES THE AGGREGATE SUPPLY AGGREGATE SUPPLY CURVE AFTER GOING OVER THE FACTORS THAT AFFECT THE AGGREGATE SUPPLY NOW LET’S HAVE A LOOK AT ITS SUPPLY CURVES, WHICH SHOWS THE QUANTITY OF GOODS AND SERVICES PRODUCED BY THAT NATION OR ITS SUPPLIERS.

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