Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: carriage_hill

Maybe I’m not thinking straight, but — inflation makes prices rise, so people need to spend more money, so the amount of money moving in the economy goes up, right? So GDP would go up? Not in a good way, because inflation is bad.

But if GDP decreased, I don’t see how inflation caused that. I would actually think that GDP decreased more than it appears and that inflation may mask some of the badness. But I’m not an economist.


7 posted on 04/28/2022 9:24:43 AM PDT by ClearCase_guy (It's hard to "Believe all women" when judges say "I don't know what a woman is".)
[ Post Reply | Private Reply | To 1 | View Replies ]


To: ClearCase_guy

They adjust for inflation. So if the raw number for current value of goods and services has gone up 8% but inflation is 9.4% you get a real GDP decrease of 1.4%. All of that is based on an accurate inflation estimate. If the real inflation figure is 15% then the GDP dropped by 7%.


20 posted on 04/28/2022 10:04:15 AM PDT by KarlInOhio (If Hitler invaded Hell, I would make at least a favourable reference of the Devil...-Churchill)
[ Post Reply | Private Reply | To 7 | View Replies ]

To: ClearCase_guy

It’s called stagflation.

We had it in the 70’s. Japan had it for about 20 years if my memory serves.

It’s a real s**t sandwich. Not politically survivable…unless you can cheat.


30 posted on 04/28/2022 2:15:20 PM PDT by Scott from the Left Coast (Make Orwell Fiction Again)
[ Post Reply | Private Reply | To 7 | View Replies ]

To: ClearCase_guy

This is because, in a world where inflation is increasing, people will spend more money because they know that it will be less valuable in the future. This causes further increases in GDP in the short term, bringing about further price increases.

High inflation can make investments less desirable, since it creates uncertainty for the future and it can also affect the balance of payments, because exports become more expensive. As a result, GDP is decreased further. So it appears that GDP is negatively related to inflation.


41 posted on 04/28/2022 4:20:14 PM PDT by Carriage Hill (A society grows great when old men plant trees, in whose shade they know they will never sit.)
[ Post Reply | Private Reply | To 7 | View Replies ]

To: ClearCase_guy
So GDP would go up? Not in a good way, because inflation is bad.

There are several ways to measure GDP. "Real GDP" adjusts for inflation, and we are probably looking at that.
52 posted on 05/02/2022 4:36:04 PM PDT by Dr. Sivana (“...we would live very well without Facebook."-B.LeMaire)
[ Post Reply | Private Reply | To 7 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson