how does the inflation rate affect the auto industry?
367823
To simply put it, as inflation goes up so does interest rates and prices of cars. It will be harder for people to buy a car and if less people buy cars then factories need less workers so they layoff autoworkers.
1124546
federal reserve rates affect all interest rates, and these are changed due to inflation and other reasons.  the fed "loans" money to other private banks at certain rates and the banks to make money have to charge over those rates.
984285
You could use the U.S. auto industry versus the Asian or more specifically the Japanese auto industry as a good example.  Unions versus non-union factory.  The U.S. has to price their autos higher to recoup the higher wage costs while the Japapense markets can price their autos lower since they don't have union shops, thus lower wage costs.
1140485
It would take a whole course to give you a comprehensive response. You might consider signing up for one at a local college.\n\nMeanwhile, in a nutshell, here's what's happening at this time in the economy: The Fed is always concerned with keeping economic growth at an acceptably high level and keeping the rate of price inflation at an acceptably low level.\n\nWhen the economy gets cooking, the money supply expands (that's actually what inflation is). The business community spends more to satisfy their higher level of business activity, and consumers feel rich so they spend more.\n\nThe US economy has been on a five-year expansion. It's reaching the level where inflation is becoming a serious problem. So the Fed has been raising interest rates to try to keep growth from getting too fast. But consumers have borrowed huge, huge amounts, including in mortgages, so if the Fed "slams on the brakes" too hard by raising interest rates too much, the risk is that a severe recession or worse could set in, triggered by that mountain of debt.\n\nMeanwhile, other economies, especially China and India, have been growing at very high rates. They are gobbling up all of the commodities they can find - oil and gas, lumber, base metals, etc. That adds to inflation.\n\nWe are in the midst of a commodities boom. Mining and energy stocks have come a long way up but have a long way still to go. Many companies have done poorly for several years because they don't operate well in a higher-inflation environment (their costs go up faster than they can raise prices).\n\nThat's a lot of information in one short message. As I said, look into taking an economics course. I was a chemist once, but enrolled in business school and loved every minute of it because of the fascinating and useful things I learned.\n\nBest of success.
339120
I doubt it.  There are many different ways to look at the economy.  One of them is the unemployment rate.  During the depression and the times leading up to it, our unemployment rate his 25% or so at its peak.\n\nRight now, we're actually doing better, as the unemployment rate has been steadily decreasing for the last few years.\n\nSee this chart: http://www.economagic.com/em-cgi/data.exe/feddal/ru\n\nAlso, if you go here: http://www.bea.gov/bea/dn/nipaweb/TableView.asp#Mid\n\nGDP has been growing pretty steadily for the last few years, even after taking into account increase in the CPI for inflation.  The economy is actually relatively healthy right .  There's just a lot of big stories on the media because people are paying a lot for gas, so stories about a possible depression sell really well.
91407
The minimum wage in this country hasn't changed at all since 1997. During that time, we can assume that on average there was an increase in over-all costs of around 3% per year due to inflation. This is actually a healthy inflation rate if you look at growth historically. Alan Greenspan, the recently retired chairman of the federal reserve, was a bulldog when it came to fighting inflation. \n\nDuring this time, however, the congress has not voted to increase minimum wage. This has been voted down numerous times. The rational for this is that the Republican majority who are now in control believe that wages should be set by the market. Therefore, if market conditions warrant paying individuals more money then they will get it due to the invisible hand of market force. The claim is that minimum wage hikes will cost businesses too much money and they will be put out of business and it actually will depress the economy. Many cities and states, however, have a higher minimum wage than the federally mandated minimum and their economies do not seem to have been hindered in the way in which supply-side economist project. This is a never ending debate between classical and keynsian economist and unfortunately for those making minimum wage, the people in charge currently, are of the classical persuasion and are not fans of regulation. They think the market should be allowed to control all aspects of the economy.
1135453
Inflation is caused by the increase in the cost of goods and services. Inflation that is caused artificially, like the price of crude oil, can only be stopped by taking away the oligopolistic profits the sellers make. Inflation caused by true scarcity cannot be cured.\n\nSo far, this (USA) country's only answer to inflation has been to increase the cost of borrowing money, which seems crazy, since that makes prices go up also. I guess you have to have a degree in economics to understand why stupidity works.
402044
They adjust the rates with inflation.  The measure depends, but you could take a look at their prospectus.  But there's probably a cap, so if inflation goes up 100% tomorrow, your TIPs won't follow that much.
196937
Advantage - People in low paying jobs will make more money.\n\nDisadvantages - Higher labor costs will be passed on to consumers in the form of higher prices.  Increasing wages, costs and prices is the definition of inflation.  The ultimate result is that although wages are higher, buying power will either remain the same or decrease due to higher prices.
56670
The price of an item is determined mostly by who and how many want to buy it, and how many are able to buy it. (Basic Supply and Demand) By raising minimum wage we make more people able to buy, and more people willing to spend, which in turn raises prices and causes inflation.
1094896
Yes, there's an effect, but no it won't affect today's price.  It takes a while for the cheaper oil to make its easy through the refineries and actually get to the gas station, so there's a bit of lag time.\n\nThere's a decent article here about prices: http://www.npr.org/templates/story/story.php?storyId=5365439
199954
An inflationary gap means that demand has outstripped supply. This typically leads to inflation of prices because there is less supply to meet the demand, if the demand curve for the product in question is inelastic, prices will rise because the supply curve will have shifted to intersetct the demand curve at a higher price point.\n\nOr more simply put, people will be willing to pay more for the product because it's not as easy to come by.
152394
the main cause of inflation is the government increasing the supply of money. But it is a little more complicated than that.  When the price of oil increases, the costs of everything that depend on oil also increase, for example. That then causes an increase in prices charged to workers. Workers then demand increased wages to maintain their standard of living. Employers give them higher wages without too much fuss because they know that they can pass the increased costs on to consumers.  The government facilitates all of this by printing more money. The government loves inflation because they borrow a lot of money at fixed interest rates. If they can cause the value of the dollar, peso, pound, euro, or whatever to decline they do not have to pay back all of what they borrowed. A neat trick and used successfully by all governments. Inflation also increases tax revenue.  If a person buys a share of stock for $100 and ten years later sells it for $200, he has to pay taxes on $100.  But if the inflaction rate is 4%, he actually made only $52. So the government makes out like a bandit again. The same goes for all borrowers.  \n\nOn the other hand those who lend money are loosers. Consequently, inflation tends to dry up the sources of capital. It is better to spend your money than to save it. Hence, that is why people have not been saving money since 1999, because Greenspan reduced the interest rate to 0. People are not as stupid as the government is.
503501
Assuming that the matter concerned remains the same (e.g. a coke), inflation essentially means that its price has increased over time (e.g. from $1 to $1.25). It can be caused by deflation of currency (e.g. Brazil), economy growth (price driven up when demand > supply) etc.\n\nThe impact of inflation to economy is immense and is hard to be explained in this forum. Suffice to say is that it is an indicator closely monitored by most governments.
868790
People of ALL races will lose jobs. Prices will rise, then they promised to raise minimum wage again. It will be a vicious circle of inflation!\n\n\nInstead, why not install a national Cost Of Living Adjustment (COLA) or all?
438298
I'm sure an Econ person is way more qualified than I to answer this question but it deals with supply and demand.\n\nThe cost of lending money (as in rising interest rates) makes less people borrow it which means that there will be less people buying goods and services which keeps inflation in check.\n\nThe more it costs banks to lend money by borrowing from the federal reserve, the more they have to charge people who take out loans to recoup that costs.  This means that the price point for borrowing money is higher meaning less people will borrow money because they have to pay back more.\n\nIn the grand scheme of things, this makes business keep their prices in check and not raise them as high as they would like.
102289
This site rocks!  http://www.westegg.com/inflation/