Why Your Money Buys Less: Understanding and Controlling Economic Inflation
1Summary
Notice that the same basket of goods costs more this year than last year, with no extra value added? That's economic inflation at work — a rise in the cost of services and products that pushes prices up because the economy is paying more for its gross output without receiving anything extra in return.
Monetary expansion accelerates this process quickly whenever it represents a large share of the money supply, meaning that genuine efforts to stimulate broad-based growth, under conditions where wasteful spending dominates, will almost always push inflation rates higher rather than lower.
2Objectives and target group
By the end of this course, participants will be able to:
- Define economic inflation and distinguish it from economic contraction.
- Identify the causes of inflation and the different types it takes.
- Calculate the inflation rate using recognised price indices.
- Apply the methods used to control and limit economic inflation.
This course is designed for:
- Students of economics colleges and institutes.
- Professionals working in international economic affairs.
- New business owners entering the commercial market.
- Anyone looking to develop themselves in this field.
3Course Content
Module 1: Inflation vs. Contraction
- Defining economic inflation as a rise in costs and prices.
- Distinguishing inflation from economic contraction (deflation).
Module 2: Causes and Types of Inflation
- How monetary expansion feeds inflation when it forms a large share of the money supply.
- Demand-pull inflation and cost-push inflation.
- Runaway (hyperinflation) versus moderate inflation.
Module 3: Measuring the Inflation Rate
- The Consumer Price Index (CPI).
- The Wholesale Price Index (WPI).
- The Producer Price Index (PPI).
Module 4: Who Wins, Who Loses
- The effects of economic inflation: winners and losers.
- The relationship between inflation and the exchange rate.
Module 5: Controlling Inflation
- Producing more physical commodities by advancing the production process through technical and technological progress.
- Identifying commodity categories that need financial support, funding, and proper investment (as with energy and pharmaceutical companies).
- Raising taxes on usurious income earned by those who benefit from inflation, which helps rein in inflation itself.
- Treating inflation through stocks and investment funds as one of the stronger available options.
Arab British Fellowship Training Academy also offers advanced courses on the Global Economic Crisis, Liquidity Management, and Financial Ethics and Corporate Governance, all of which help in gauging the extent of economic inflation across states.