Over the past six months political parties have argued whether trillions of dollars of additional spending would
Question:
Over the past six months political parties have argued whether trillions of dollars of additional spending would create transitory or continuous inflation. With significant inflation for energy, food, housing, and nearly all consumption in the U.S economy, the Federal Reserve and most economists now see pressures on consumer prices as continuing over the next decade. Government estimates see inflation as 6% per year or higher. As wages normally lag the inflation rate, consumers need to plan for significant increases in pricing.
Required:
1) Created a realistic household budget for the year 2022. Take time to think about, and include all categories of cost such as food, energy, fuel, car, housing, taxes, travel, retirement, and anything else. Some of these items may be temporary fixed cost over time, while others will be very inflation sensitive.
2) Run an analysis using the present value tools we learned in this course…Create a budget for the year 2027 (five years from now) to examine the effects of inflation overtime. Prepare a comparative budget with four columns. The first column should be in nominal dollars (your 2022 budget). The next three columns should be for a best (3% inflation per year), average (6% inflation per year), and worst case (8% inflation per year) inflation scenarios for the year 2027.
3) Discuss your comparative results. This discussion is well beyond just the numbers…what do these results mean? How will these results affect your life?
Expert Answer:
Required Created a realistic household budget for the year 2022 Take time to think about and include ... View the full answer
