Price Level Changes In The Economy

Price Level Changes In The Economy

For an Online Reputation Management company, price-level changes are something that they may have to do in their business in order to be competitive in this industry. Price-level changes include something called inflation which is the rising prices caused by a combination of excessive consumer demand and the higher costs of things like raw materials, human resources and other factors of production.

There is also core inflation rate which is the inflation rate after energy prices and food prices get removed, along with demand-pull inflation which is known as excessive consumer demand, cost-push which is the increase of costs in the factors of production and hyperinflation which is the economic situation marked by soaring prices. Deflation is the opposite of inflation and this means that prices fall and this causes a weak economy.

In order for a company to keep up with price-level changes, there is a monthly average change in the prices of goods and services that can be checked in the Consumer Price Index. This is also measured by using the typical market basket which is commonly purchased goods and services that a typical family would have and this gets measured overtime and this is how inflation gets calculated. The CPI market basket contents include things like food, shelter, household operations, furnishings and equipment, clothing and footwear, transportation, health and personal care, alcoholic beverages and tobacco products along with recreation, education and reading. Employment levels also get measured to keep up with the price-level changes and the unemployment rate is something to consider. This is the percentage of total workforce actively seeking work but currently unemployed. There are four types of unemployment including frictional unemployment which means you are temporarily not working and seeking a job,  seasonal unemployment which is not working during some months but you aren’t looking for a job, structural unemployment which is not working due to no demand for skills and cyclical unemployment which is not working due to economic slowdown and looking for a job.

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