Hi all,
In an effort to keep myself accountable, I am going to share some concepts that I was initially unfamiliar with onto this forum. The purpose of this is to not only make sure that I am not merely spewing out memorized facts, but also to help others who are unfamiliar with Economics. If there are any errors, please let me know. If you don't find this helpful, feel free to not read.
Inflation
Inflation is the economic concept of prices constantly going up. An example of this is how in the movie Pride and Prejudice, Mr. Darcy is known as one of the richest men in Britain even though his income was only $10,000 in 1813. Inflation highlights the question: Why are prices going up?
Why does Inflation happen?
Inflation happens as a result of at least one of the following concepts.
Cost-push inflation is when businesses have a greater increase in costs incurred, and therefore as a result need to push some of these costs onto customers in order to keep their businesses surviving. These increased costs can be incurred as a result of workers demanding more pay, raw material prices (such as oil) going up, etc.
2.Demand-Pull Inflation
An easier way of remembering demand-pull inflation is recognizing that it is when "there are too many dollars, and too few goods". Basically, it is when consumers have much money and are all chasing after goods that cannot keep up with the demand. Higher prices are the result of the demand being too high.
3.Printing Money
Governments want to see their economy doing well, and to do this, they may print more money and have an increased circulation of money going around. However, with the increase of money circulation, the value per note becomes less. Instead of this allowing consumers to buy more items, this just causes prices for individual items to go way up (for example, one set of bananas may have costed $2 before the circulation of money, but now $5 because the value of the dollar decreased as more notes were produced). The Window of Opportunity is the point of time where while more money is circulating, prices are still low since it takes time for the value of money to decrease.
Interesting fact about the Window of Opportunity:
How can governments cause inflation (prices going up)?
Governments can cause inflation by decreasing taxes, thereby allowing people to have more disposable income to spend. With this disposable income, in the longer term, increased demand causes increases in prices.
NOTE: If I got anything wrong here or if in anyone has anything they wanna add to help others, please comment.
Sources:
https://www.investopedia.com/terms/d/demandpullinflation.asp
1. Question Type: MSS
What is provable from the stimulus? Focus on this, eliminating 100% nonprovable
C- we just know that the box office success shows only a financial success, we don't know anything else about what it depends on. For all we know, they could also depend on finding it funny but they just don't show it.
This is also not a conclusion that the stimulus is moving towards.
Why I found C attractive:
Well, I thought that D was a little much. I jolted and thought "well, how do we know the film historys don't believe X?". well... the whole stimulus moves to support that as a conclusion. C's only support is one statement, and that idea is a conflict between what box office indicates vs what box office depend on - a discussion we have no support on.
Takeaway: Focus on what the stimulus pushes out for MSS. Push back each AC and ask myself: Is this most supported? Where is the support?