Inflation and Deflation continuation

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An inflationary development is characterized by rising prices within a certain period of time.

The rising prices is a consequence of an uneven development in the quantity of goods on offer and the quantity of money available, which itself determines the demand and is the inflation rate.

The causes of inflation are generally complex and can arise either from the goods or from the monetary side.

The consequences of inflation are extremely damaging for the economy. Inflation becomes stagnation when economic growth decreases or comes to a halt, but inflation continues to rise.

If the state does not take measures to combat stagnation, this leads to stagflation.

Deflation, the opposite development to inflation, represents a reduction in the supply of money in comparison with the supply of goods.

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Are high quality goods and services always very expensive?

Возможный ответ: Yes, they are, because high quality goods need high quality materials, high quality staff and high quality equipment. The same is true of services. But low quality goods may be as well expensive if those who produce them are cheaters. Such people steal trading marks and official names of well-known companies. What shall we do? As for services, it is easy – try to find any references and referees in the Internet, some opinions on the services on offer. As for goods, don’t expect to find high-quality goods at the markets or street stalls.

Do low prices always mean low quality?

Возможный ответ: As a rule, yes. But there are exclusions. If the company starts working and needs customers badly, it can offer high-quality goods at low prices to attract customers. Besides, you can buy excellent goods at a Christmas or season sale. Some large shops buy great lots of goods and it allows them to set low prices.

Do prices grow both for high and low quality?

Возможный ответ: We think, yes. If the country is in collapse, inflation is of hyper type, prices are sure to grow, both for high and low quality. But the answer to this problem also depends on the situation and the type of the product. Thus low quality bread is sure to rise in the price during famine, but high quality cars are unlikely. Because bread is essential, but cars are not.

Do high prices always mean inflation, stagflation or deflation?

Возможный ответ: High prices are never associated with deflation, because deflation is decrease in prices which is the case when supply of goods is higher than demand for them.

But stagflation and inflation are sure to be associated with high prices. Inflation is growth of prices due to shortage of goods on offer and a great amount of money available. Stagflation is decline in production and inflation, two things combined. Stagflation is even worse than inflation.

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London is a most expensive city in the world. Inflation is running at about 15 percent. Transport is extremely expensive. The fares on the underground (плата за проезда в метро) are very high, about two pounds sterling for a trip which is equal to 90 rubles.

Accomodation (жилье) is extremely expensive too. Utilities (коммунальные услуги) include charges for gas, electricity, water. The cost of gas is about 100 hundred dollars a month, electricity is 46 dollars a month, 20 dollars you’ll pay for water and 25 dollars for sewerage ['s(j)u:(q)rIdZ] (канализация). Londoners don’t pay for heating (теплоснабжение), because each family has a boiler to warm the water. As for garbage only several plastic bags for a flat are allowed; if more garbage – pay more.

Londoners don’t pay a real-estate (property) tax (налог на имущество), but they pay the so called Council Tax (муниципальный налог) to maintain schools, police [pq'li:s] (на содержание школ, полиции), for street cleaning. The amount of money to be paid as the council tax is determined (определяется) by the municipality service, and is equal to 200 hundred dollars a year on the average (в среднем). Besides you are to pay the service charge (плата за обслуживание) for the house you live in to be taken care of.