5. Summarize current and projected trends in the economy with regard to GDP growth, unemployment, and inflation. How should you use this information to make personal financial and career planning decisions?
CPI or Consumer Price Index
A rise in the CPI indicates inflation. The CPI or the consumer price index is used as an index for salaries, wages, contracted prices, pensions. This is done to adjust with the inflation effects. [ It is an important economic indicator.
GDP or Gross Domestic Product
The gross domestic product is another important economic indicator and is usually
inflation adjusted. This is an important tool for measuring the rate of inflation.
The important segments, which are hampered include:
Various monetary policies
Various fiscal policies
The effect of inflation and economic growth is manifested in the following cases:
If the price of goods increases and people have to compensate for the increase in price, they usually make use of their savings. In the event when savings are depleted, fund for investment is no longer available. An individual tends to invest, only if savings of an individual is strong and has sufficient money to meet his daily needs. ]
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