INFLATION What is inflation Inflation occurs when total

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INFLATION

INFLATION

What is inflation? Inflation occurs when total demand at the current price level is

What is inflation? Inflation occurs when total demand at the current price level is greater than total supply. In such a case, there is a continuous increase in the general level of prices. In other words, inflation can be defined as the continuous increase in prices of all production factors, goods and services in an economy. However, not all high price levels should be taken as inflation. Inflation is also defined as money bloating in an economy. Even the amount of money in the market is increase, if people have a tendency to save the money, in such a case it shouldn’t be taken as an inflation.

Types of inflation according to the reasons of occurrence: Demand inflation: Total demand is

Types of inflation according to the reasons of occurrence: Demand inflation: Total demand is greater than total supply due to lack of production. The price increases occur when the desire to buy, namely, the effective demand exceeds the supply capacity. Cost inflation: Increases in the price of one or all of the cost factors, which are defined as economic sacrifices that must be incurred to produce various goods and services, cause cost inflation. For example, animal husbandry enterprises without any increase in production; increases in feed, medicine, labor wages and etc. prices may lead to higher costs and thus cost inflation. This type of inflation is also called import inflation. Price inflation: The prices of economic goods and services do not always depend on supply and demand. In some periods, the State announces support purchase prices and makes purchases in order to increase the production of some economic goods and to improve the social and economic welfare of the producer. As a result of these interventions to the economy; significant increases in the revenues of the producer group is seen. This increase in revenue causes a number of potential demands to become effective. This creates price inflation.

 Types of inflation by severity: Moderate inflation is the inflation that occurs when

Types of inflation by severity: Moderate inflation is the inflation that occurs when there is an increase of around 5 -10 percent in annual general price levels. Today, some economists prefer moderate inflation to deflation. This is because, in moderate inflation, although there is a slight increase in general price levels, there is also an increase in saving tendency. Savings increases may turn into new employment and investments. However, it should not be forgotten that moderate inflation may turn into galopan inflation as continuous price increases become an expectation. Galopan inflation, on the other hand, is inflation resulting from very high price increases. In this gallop inflation, which does not allow money to fulfill its functions in the economy, there can be serious socio-economic problems in the economy. For example, galopan inflation leads to a reduction in the volume of savings in the economy, misuse of resource usage, and speculative gains rather than investments that increase production. At the same time, it deteriorates the balance of trade and payments against the economy of the country and causes a decrease in the volume of employment. The inequality in income distribution occurs which is one of the most important problems in the economy. In galopan inflation; Public expenditure reduction, broad-based and fair taxation, avoiding emissions in economy can be listed as necessary measures that should be considered.

Effects of inflation on economic life Inflation dissolves the savings in money, especially for

Effects of inflation on economic life Inflation dissolves the savings in money, especially for those with medium and narrow income and who cannot make any investments. A similar effect is seen in the currency - receivable - debt relations. Often, the debtor is profitable, even though the creditor is at a loss. The middle-income savings, whose money constantly depreciates, they don’t make savings no longer and consume with this money without further loss. Inflation also has a negative impact on foreign trade and balance of payments. Increase in domestic prices while exchange rate is constant, reduces exports and makes imports attractive. The main reason for inflation is that aggregate demand is higher than total supply at the current price level. What is important here is the high demand.

NATIONAL INCOME, DEFINITION, SCOPE AND CALCULATION METHODS

NATIONAL INCOME, DEFINITION, SCOPE AND CALCULATION METHODS

Economic activity is in a circulation. This flow consists of money and property flows

Economic activity is in a circulation. This flow consists of money and property flows between households (family, household), enterprises and institutions such as government. It is possible to measure and compare the changes in these currencies in one country during a year.

 Goods and Services Market REVENUES EXPENSES Enterprises Home Administrations INCOMES COSTS Labor Nature

Goods and Services Market REVENUES EXPENSES Enterprises Home Administrations INCOMES COSTS Labor Nature Capital Production Factors Market

National income calculations are made in three ways: Production way: This method is the

National income calculations are made in three ways: Production way: This method is the sum of the various goods and services produced in enterprises by multiplying their own prices within a year. This value also gives the Gross National Product. The Net Gross National Product is calculated by subtracting the wear and aging shares from the gross national product. Incomes way: In this method, the income (profit, wage, interest, rent) of the production factors involved in economic activity is summed. The result is defined as National Income. Expenses way: It is calculated by summing the consumption and investment expenditures made by the private sector and public sector within a year. This result is defined as National Expenditure. National Income, National Product, National Expenditure; it is nothing but the determination of the flows of goods and services in three different points in an economy. Therefore, they are equal.

Why are national income calculations made? GNP at current prices is calculated by evaluating

Why are national income calculations made? GNP at current prices is calculated by evaluating the production quantities (Q) of the annual goods and services at the prices (P) of the year in which they are produced. The national income calculation of a year at current prices can be formulated as follows. It is seen that GNP has increased year by year. According to this, can it be said that there is economic growth?

National accounts should be made at fixed prices in order to make comparisons by

National accounts should be made at fixed prices in order to make comparisons by years. For example, let's compare GNP development in the period 1990 -2002; For this purpose, lets calculate the GNP values of all years in this period with the prices of 1990: When fixed prices are calculated, there is an increase in GNP. According to this, can it be said that there is economic growth?

It is necessary to take the population into consideration to look at the GNP

It is necessary to take the population into consideration to look at the GNP per capita. For this purpose, the following formula is used. In the calculation of national income in Turkey, production and revenues methods are used together.

GNP (Million TL) GNP Per Capita (TL). GNP Per Rural Population (TL) ($) Years

GNP (Million TL) GNP Per Capita (TL). GNP Per Rural Population (TL) ($) Years Population 1990 56. 098. 000 397. 177. 547 7. 066. 839 2. 682 2. 962. 627 1136 1992 58. 401. 000 1. 103. 604. 909 18. 897. 021 2. 708 6. 786. 721 1037 1995 61. 644. 000 7. 854. 887. 167 127. 423. 385 2. 759 48. 318. 122 1070 1998 65. 001. 000 53. 518. 331. 580 843. 358. 573 3. 255 - - 2000 67. 803. 927 125. 596. 128. 755 1. 861. 759. 072 2. 965 - - 2002 68. 582. 000 275. 032. 365. 953 3. 950. 138. 827 2. 598 - - 2004 69. 421. 000 428. 932. 343. 026 5. 974. 903. 440 4. 172 - 1419 2005 70. 256. 000 486. 401. 032. 274 6. 749. 476. 615 5. 008 - 1500 2008 71. 517. 100 646. 893. 000 9. 045 6. 700 - - 2011 74. 724. 269 1. 294. 893. 000 18. 799 10. 444 - 3000 -3500 ($)

In a national economy, the distribution of national income among the people constituting the

In a national economy, the distribution of national income among the people constituting the nation is as important as the continuous and stable increase of national income. The distribution of national income per capita can be monitored by Lorenz Curve. National Income% 100 80 Absolute Equality Line 60 I III 40 28 18 II 32 20 20 40 60 80 100 Population % There is absolute equality in the economy, where incomes are distributed equally among individuals. If the income distribution is not equal, the Lorenz curve forms an arc below a 45 o line.

Table 3: Distribution of Revenues and Income Group in Turkey in 2013 Whole Turkey

Table 3: Distribution of Revenues and Income Group in Turkey in 2013 Whole Turkey Urban Rural Income Group Average Income(TL) Share % Average Income (TL) Share % The lowest %20 4. 016 6, 1 4. 811 6, 4 3. 128 6, 7 2. %20 7. 076 10, 7 8. 213 10, 9 5. 331 11, 4 3. %20 10. 080 15, 2 11. 419 15, 2 7. 522 16, 1 4. %20 14. 193 21, 4 15. 888 21, 1 10. 609 22, 6 The highest %20 30. 889 46, 6 34. 900 46, 4 20. 293 43, 3 Total 13. 250 100 15. 046 100 9. 374 100 Reference: TÜİK

Turkey 2013 100 80 60 53. 4 40 32 20 16. 8 6. 1

Turkey 2013 100 80 60 53. 4 40 32 20 16. 8 6. 1 0 0 0 20 40 60 80 100

Rural Area 2013 100 Income % 80 60 56. 8 40 34. 2 20

Rural Area 2013 100 Income % 80 60 56. 8 40 34. 2 20 18. 1 6. 7 0 0 0 20 40 60 Population % 80 100

Urban Area 2013 100 Income % 80 60 53. 6 40 32. 5 20

Urban Area 2013 100 Income % 80 60 53. 6 40 32. 5 20 17. 3 6. 4 0 0 0 20 40 60 Population % 80 100

Agriculture and Non-Agricultural Sectors 2013 100 Income % 80 60 40 20 0 0

Agriculture and Non-Agricultural Sectors 2013 100 Income % 80 60 40 20 0 0 20 40 60 Population % Rural Area Urban Area 80 100

Gini Coefficient and Calculation • Another tool used to measure inequality in income distribution

Gini Coefficient and Calculation • Another tool used to measure inequality in income distribution is the "Gini Coefficient". This coefficient, developed by Italian economist and statistician Corrado Gini, is a decimal value with a collection rate of 0 to 1. In other words, the coefficient is the ratio of the area between the absolute equation line and the Lorenz curve to the area of the triangle below the absolute equation line. • The Gini coefficient inequality area, is calculated by the area A, dividing the area by under the Lorenz Line (area B).

Table-4: Turkey Gini Coefficient Values by years Urban-Rural Sector and Overall Turkey Gini Coefficient

Table-4: Turkey Gini Coefficient Values by years Urban-Rural Sector and Overall Turkey Gini Coefficient by Years 2006 2007 2008 2009 2010 2011 2012 2013 Turkey 0, 428 0, 406 0, 405 0, 415 0, 402 0, 404 0, 402 0, 400 Urban 0, 415 0, 394 0, 395 0, 405 0, 389 0, 394 0, 391 0, 392 Rural 0, 406 0, 375 0, 378 0, 380 0, 379 0, 385 0, 377 0, 365 The smaller the Gini Coefficient, the better the income distribution in the country. In the Gini Coefficient, the world average is 0. 399, the average of OECD countries is 0. 310, the average of EU countries is 0. 304. Among the Nordic countries with the best income distribution, the coefficient is 0. 25 in Sweden, 0. 34 in Switzerland, 0. 33 in France, 0. 28 in Germany and 0. 34 in England.

HAYVANCILIK EKONOMİSİ DERS NOTLARI Prof. Dr. Yılmaz ARAL MONEY… SCOPE AND FUNCTIONS

HAYVANCILIK EKONOMİSİ DERS NOTLARI Prof. Dr. Yılmaz ARAL MONEY… SCOPE AND FUNCTIONS

HAYVANCILIK EKONOMİSİ DERS NOTLARI Prof. Dr. Yılmaz ARAL Money is a measure of value

HAYVANCILIK EKONOMİSİ DERS NOTLARI Prof. Dr. Yılmaz ARAL Money is a measure of value in a national economy, a means of exchange with various economic functions loaded. The value of the unit of economic goods and services expressed in currency is called price. It is possible to consider the functions in which money is loaded in economic life in 4 main groups. These; Being a measure of value, Being a tool of change, Value retention and They are functions of being a measure in debt payments.

HAYVANCILIK EKONOMİSİ DERS NOTLARI Prof. Dr. Yılmaz ARAL Value measure function In modern economies,

HAYVANCILIK EKONOMİSİ DERS NOTLARI Prof. Dr. Yılmaz ARAL Value measure function In modern economies, it is compulsory to use a common unit of measure for the measurement of the value of economic goods supplied to the market. In the absence of this measure, economic goods will have to go to a conclusion by comparing some of the subjective benefits. The proportions to be used in this comparison include different benefits for each person Money provides significant convenience in the measurement of value as a liquid payment instrument for the purchase of various goods and services. Change tool function In fact, money has no value as matter. So why are we willing to change the element of money in the face of various economic goods and services? This is because money is generally accepted by society. It is known that the exchange of goods with goods creates serious economic problems. Therefore, money confronts various economic goods and services and facilitates its exchange.

HAYVANCILIK EKONOMİSİ DERS NOTLARI Prof. Dr. Yılmaz ARAL Value storage function Savings, as it

HAYVANCILIK EKONOMİSİ DERS NOTLARI Prof. Dr. Yılmaz ARAL Value storage function Savings, as it is known, is the unconsumed part of income. Retention of an economic commodity retained from consumption is both difficult and costly to maintain for the same quality for a long time. However, in a money economy, saving economic goods is easy and inexpensive to be converted into money and there is also the possibility of providing income (eg interest). Measurement function in debt payments In a monetary economy, debts are expressed in currency and paid in the same units. In a money-free economy, problems arise in the payment and evaluation of a loan in the future.

HAYVANCILIK EKONOMİSİ DERS NOTLARI Prof. Dr. Yılmaz ARAL The type of money Coins: Some

HAYVANCILIK EKONOMİSİ DERS NOTLARI Prof. Dr. Yılmaz ARAL The type of money Coins: Some precious metals, such as gold and silver, were minted in special mints. Gold-linked monetary system has reached the highest point of use in XVIII. century Later, it lost its relative importance and left its place to other currencies. Paper Money (Banknotes and Checks): In today's economies, the growth of economic life and the increase in the volume of goods have led to the growth of money volume and need. Banknotes and checks are used for such large payments. The nominal value written on the banknotes was initially a gold equivalent, but not today.

HAYVANCILIK EKONOMİSİ DERS NOTLARI Prof. Dr. Yılmaz ARAL Any Questions ? !?

HAYVANCILIK EKONOMİSİ DERS NOTLARI Prof. Dr. Yılmaz ARAL Any Questions ? !?