Module4Lecture2Notes - UGBA 10 Module 4 Lecture 2 Notes...

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UGBA 10 Module 4 Lecture 2 Notes 3/21 Accounting and Finance Bond is a promise to pay amount at the end, so fixed instruments Price of a “Value Meal” Parents worried about inflation o Some periods of high inflation o Zimbabwe inflation is 700%/yr Bread has to be bought at 8:00 am because it is more expensive at 5:00 pm o The joy of McDonalds Early retirement at age 61 If 8%, then $75.82! High Inflation Causes Social Problems Hard to save for future if high inflation o Big social costs o Grandma has good pension but 7% inflation, she becomes very poor o Syllabus articles says that seemed like inflation was under control But in 1974, it was greater than 10% 1981 there was high inflation If grocery bill is raised to 14%/yr, you would not settle for a 4%/yr salary raise Dorms are $1,000/mo, next year if it is $1,040/mo, spring will be even higher o How will parents plan for college? o Syllabus articles says maybe this increase is due to an external cause What Made the Inflation Hump? Oil $3/barrel, rose to $16 o Last 2 years, there was a substantial increase in oil, but nothing happened to inflation o Economy can absorb oil shocks, probably oil is not primary factor Probable cause: bankers mismanaged money supply o Aware of inflation, generation before experienced high uncontrollable inflation o Our experience is stability in prices, which is a good thing o 2 1 / 4
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