UNIVERSIDAD CATÓLICA DE SANTIAGO DE

GUAYAQUIL

FOREIGN LANGUAGE 2

MISS ISABEL PEREZ

ECONOMY- A

TUTORIAL FIRST PART

“INFLATION EFFECTS ON MIDD-CLASS

INCOME GROUPS”

PREPARED BY:

JENNIFFER CORTEZ LAINEZ

JUNE 11

2013

INTRODUCTION

This report has been prepared at the request of Jenniffer Cortez,economics student the

Santiago Catholic University of Guayaquil. The purpose of this report is to present information

on how inflation affects the middle class and the effects produced. This report does not

include salaries and nor of income received by each person of the middle class. In gathering

data for this report, the research was conducted based on the records of several periods of

government which shows the behavior of inflation, collect information take me about three

weeks.

Executive Summary

All information obtained about inflation and the effects it has on:

Quality of life and reduction of costs

Purchasing power

Imports

Findings

Quality of life and reduction of costs

People reduce the consumption of goods and services

Decreased quality of life due to the income they receive, since the prices are higher and

looking to buy and spend less.

People looking to spend less than they do in goods and services needed cash.

Purchasing power

Inflation reduces the purchasing power of money is that it reduces the value of which can be

purchased for a set amount of money.

The inflation affects all individuals equally, but may harm some social groups more than

others, and may even benefit certain individuals or groups.

Groups affected by inflation:

Retirees, their incomes tend to grow unless prices.

The workers, who cannot achieve increases in their wages

Savers, the rate of interest they receive on their savings are less than the inflation rate.

Imports

The high domestic inflation rates discourage imports and encourage exports, if not

devalued in an equivalent proportion.

This is because it increases the price of domestically produced goods and foreign goods

become relatively cheaper.

It is important to note that although it is almost necessary to devalue can also further

accelerate the inflationary process, especially by raising the price of imported inputs.

Conclusions

Inflation is an economic imbalance that affects a country, people, business, etc..

Raise the price of the products, currency devaluation and reduces the partnership

income

Recommendations

To insentive saving

Reduce spending

Balancing the purchasing power