Inflation, especially high inflation, increases profits as well as the cost of doing business and implies higher demand for products at higher prices and a tight employment market with rising wages. Investopedia reports that inflation, "Is not intrinsically good or bad."Continue Reading
Inflation is present when prices are higher than they were previously. As of 2014, The Board of Governors of the Federal Reserve System reports that an inflation rate of 2 percent is consistent with the Federal Reserve's mandate for maximum employment and stable profitability. This small amount of inflation ensures that the economy is able to grow and that business are profitable enough to maintain and gradually expand workforces.
Inflation above 2 percent can cause an, "inflationary spiral." In this situation, prices are pushed higher by rising consumer demand. Businesses are profitable and hire aggressively to match production with demand. Tight labour markets lead to wage increases. This leads to a higher cost of living with higher rents, home values, consumer prices and prices of raw materials. This represents further increased demand for products and services, which also increases prices, further increasing company profits. These increased company profits again leads to more hiring, which continues to put inflationary pressure on wages and prices. The Business Directory describes this as, "Reinforcing feedback of a vicious circle"Learn more about Economics
According to Investopedia, microeconomics is the study of decisions made by people and businesses regarding the allocation of resources and prices of goods and services, while macroeconomics is the study of the behavior of the economy as a whole. Microeconomics focuses on individual companies, and macroeconomics looks at countries and governments.Full Answer >
An example of a resource market would be a job resource market where businesses gather new employees that are highly qualified for specific positions that the business's existing employees may not be able to fill based on qualifications alone. A resource market is a place where resources are exchanged and is not limited to money only as labor and raw materials such as steel can be exchanged.Full Answer >
Crude oil was cheapest by the barrel in 1998, when each drum cost just over $17 once adjusted for 2015 prices. The next closest price was recorded in 1946 and cost approximately $19.41 after adjusting for inflation. The price of oil is highly susceptible to the supply and demand of the market.Full Answer >
The average cost of a therm of natural gas changes on a regular basis due to fluctuating energy prices. In February 2015, for example, the average cost of a therm of utility gas was $1.087, according to the Bureau of Labor Statistics. One year previously, the price averaged $1.175.Full Answer >