Tentamen (uitwerkingen)

OTE2601 ASSIGNMENT 2 DUE DATE 05 JULY 2024 QUESTION 1 Inflation is the word used to indicate a drop in the buying power of money as a result of a general rise in prices of goods and services. In simple terms, inflation is an increase in prices over a p

0 keer verkocht

Vak
OTE2601 (OTE2601)

Instelling
University Of South Africa (Unisa)

OTE2601 ASSIGNMENT 2 DUE DATE 05 JULY 2024 QUESTION 1 Inflation is the word used to indicate a drop in the buying power of money as a result of a general rise in prices of goods and services. In simple terms, inflation is an increase in prices over a period of time. Inflation is what make...

[Meer zien]

Voorbeeld 3 van de 16 pagina's

Bekijk voorbeeld

Geupload op 3 juli 2024
Aantal pagina's 16
Geschreven in 2023/2024
Type Tentamen (uitwerkingen)
Bevat Onbekend

ote2601 assignment 2 due date 05 july 2024 questio

Instelling
University of South Africa (Unisa)
Vak
OTE2601 (OTE2601)

Volgen

HOPEACADEMY

Lid sinds 2 jaar 893 documenten verkocht

€2,67

In winkelwagen

Op verlanglijstje

100% tevredenheidsgarantie
Direct beschikbaar na je betaling
Lees online óf als PDF
Geen vaste maandelijkse kosten

,OTE2601
ASSIGNMENT 2
DUE DATE 05 JULY 2024

QUESTION 1
Inflation is the word used to indicate a drop in the buying power of money as a
result
of a general rise in prices of goods and services. In simple terms, inflation is an
increase in prices over a period of time. Inflation is what makes your money
worth less over time – it is your money’s biggest enemy. It reduces the buying
power of money month by month and year by year.

1.1 How does inflation affect the consumer? Elaborate on the most important
characteristics of inflation [25

The Effects of Inflation on Consumers

Inflation is a complex economic phenomenon that significantly impacts
consumers by eroding the purchasing power of their money. As prices rise over
time, consumers need more money to purchase the same goods and services,
leading to a reduction in their purchasing power. This essay will explore the key
characteristics of inflation and how they shape consumer behavior and financial
well-being.

Firstly, inflation leads to a reduction in purchasing power, which affects all
consumers but has a more pronounced impact on those with fixed incomes, such
as retirees and low-wage workers. For instance, if the inflation rate is 3% per year,
an item that costs R100 today will cost R103 next year. This means that
consumers need more money to purchase the same items they previously bought
for less.

Secondly, inflation leads to a higher cost of living as everyday expenses like food,
housing, transportation, and healthcare become more expensive. When the cost
of essential goods and services increases, consumers may need to adjust their
spending habits, cutting back on non-essential purchases or seeking cheaper

, alternatives. Over time, the increased cost of living can strain household budgets,
particularly for those who do not receive corresponding increases in their income.

Thirdly, inflation erodes the value of savings if the interest rate earned on savings
accounts or other fixed-income investments does not keep pace with inflation.
This discourages saving and can lead consumers to seek higher returns through
investments in stocks, real estate, or other assets that historically outpace
inflation. However, these investments come with higher risks, and not all
consumers are willing or able to take on such risks.

Fourthly, inflation introduces uncertainty into the economy, making it difficult for
consumers to plan for the future. When prices are unpredictable, consumers may
find it challenging to budget accurately, save for long-term goals, or make
significant financial commitments like buying a home or funding education. This
uncertainty can lead to a cautious approach to spending and investment,
potentially slowing economic growth.

Lastly, inflation can lead to a redistribution of wealth within an economy.
Borrowers tend to benefit during periods of inflation, as they repay their loans
with money that is worth less than when they borrowed it. Conversely, lenders
and individuals on fixed incomes are disadvantaged because the value of the
repayments or fixed payments they receive decreases over time. This
redistribution effect can exacerbate economic inequality, as those with assets
that appreciate in value during inflationary periods often see their wealth grow,
while those without such assets fall behind.

In conclusion, inflation has a significant impact on consumers, affecting their
purchasing power, cost of living, savings, and investments. It also creates
uncertainty and redistributes wealth within an economy. Understanding these
effects is crucial for consumers to adapt their financial strategies and mitigate the
adverse impacts of inflation. By staying informed and making prudent financial
decisions, consumers can navigate the challenges posed by inflation and protect
their economic well-being.

References

Dit zijn jouw voordelen als je samenvattingen koopt bij Stuvia:

Bewezen kwaliteit door reviews

Studenten hebben al meer dan 850.000 samenvattingen beoordeeld. Zo weet jij zeker dat je de beste keuze maakt!

In een paar klikken geregeld

Geen gedoe — betaal gewoon eenmalig met iDeal, Bancontact of creditcard en je bent klaar. Geen abonnement nodig.

Focus op de essentie

Studenten maken samenvattingen voor studenten. Dat betekent: actuele inhoud waar jij écht wat aan hebt. Geen overbodige details!

Veelgestelde vragen

Wat krijg ik als ik dit document koop?

Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.

Tevredenheidsgarantie: hoe werkt dat?

Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.

Van wie koop ik deze samenvatting?

Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper HOPEACADEMY. Stuvia faciliteert de betaling aan de verkoper.

Zit ik meteen vast aan een abonnement?

Nee, je koopt alleen deze samenvatting voor €2,67. Je zit daarna nergens aan vast.

Is Stuvia te vertrouwen?

4,6 sterren op Google & Trustpilot (+1000 reviews)

Afgelopen 30 dagen zijn er 67418 samenvattingen verkocht

Opgericht in 2010, al 15 jaar dé plek om samenvattingen te kopen

Start met verkopen

Tentamen (uitwerkingen)

OTE2601 ASSIGNMENT 2 DUE DATE 05 JULY 2024 QUESTION 1 Inflation is the word used to indicate a drop in the buying power of money as a result of a general rise in prices of goods and services. In simple terms, inflation is an increase in prices over a p

Document informatie

Onderwerpen

Geschreven voor

Verkoper

Ontvangen beoordelingen

Voorbeeld van de inhoud