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Q&A for How to Calculate Inflation
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QuestionHow do I calculate inflation given the nominal GDP and the real GDP plus the deflator?Community AnswerGet the difference of the RGDP and NGDP. Divide the difference by the NGDP. The quotient of the two is the inflation rate.
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QuestionIf the inflation rate is 1500%, does that mean that a $5 item will cost 1500 times the base price?OrangejewsCommunity Answer1500% is 15 times the original, so 1500% of $5 is $75. But since inflation is a rate of growth, it means the $5 item would inflate to $5 + $75 or $80.
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QuestionIs inflation a disease to the economy?DonaganTop AnswererIt is, but deflation is even worse. Because it's very hard to keep an economy on the cusp between inflation and deflation, most central banks try to maintain a small amount of inflation in order to keep the economy out of deflation.
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QuestionWhat causes inflation in the first place?Community AnswerIn general, people expect a raise in salaries every year. In order to achieve that, companies need to increase their overhead costs—like their production costs or their selling price. There are also increases in things like transportation costs and raw materials.
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