Maths Exploration - Economics
Maths Exploration
Introduction
The Inflation rate changes every month and year, affecting the value of the money in the country. Inflation reflects a reduction in the purchasing power per unit of money, causing the price of goods and services to increase. Although people seem to see inflation as “evil”, but it is a necessary side-effect of a growing country, as economist sees that a small (<2%-3%) consistent amount of inflation is actually good. Without inflation the prices in the market will fall out of balance, if everything is cheap including costs of production, the resources will be very little as everyone will bulk buy, causing the resources to run out shortly.
Aim
In this exploration, we are going to see how the interest rates the bank gives us will never catch up with inflation, by comparing the interest rates and the inflation rate for the past 14 years. We will also explore a saving plan in a bank, and compare the gain from the plan with the inflation. I chose this to be my exploration because last summer when I was creating a bank account, the representative of the bank came up to me and tried to persuade me into joining a saving plan. Throughout the whole time he stressed on saying that the interest rate has been really low in the past years, and without joining his plan I was basically losing money every day. So I am curious whether what he said was true or was it just a trick for me to invest my money with him. Inflation is very important in the real world, and our spending may depend on it as well as the interest rate.
Data Collection Year | Interest Rate | Inflation Rate | 2000 | 4.80% | -5.20% | 2001 | 2.38% | -2.10% | 2002 | 0.35% | -3.90% | 2003 | 0.07% | -1.50% | 2004 | 0.03% | -1.90% | 2005 | 1.26% | 0.20% | 2006 | 2.70% | 1.90% | 2007 | 2.42% | 2.30% | 2008 | 0.45% | 3.90% | 2009 | 0.01% | 2.10% | 2010 | 0.01% | 1% | 2011 | 0.01% | 2.90% | 2012 | 0.01% | 5.90% | 2013 | 0.01% | 3.70% |
This table shows
Introduction
The Inflation rate changes every month and year, affecting the value of the money in the country. Inflation reflects a reduction in the purchasing power per unit of money, causing the price of goods and services to increase. Although people seem to see inflation as “evil”, but it is a necessary side-effect of a growing country, as economist sees that a small (<2%-3%) consistent amount of inflation is actually good. Without inflation the prices in the market will fall out of balance, if everything is cheap including costs of production, the resources will be very little as everyone will bulk buy, causing the resources to run out shortly.
Aim
In this exploration, we are going to see how the interest rates the bank gives us will never catch up with inflation, by comparing the interest rates and the inflation rate for the past 14 years. We will also explore a saving plan in a bank, and compare the gain from the plan with the inflation. I chose this to be my exploration because last summer when I was creating a bank account, the representative of the bank came up to me and tried to persuade me into joining a saving plan. Throughout the whole time he stressed on saying that the interest rate has been really low in the past years, and without joining his plan I was basically losing money every day. So I am curious whether what he said was true or was it just a trick for me to invest my money with him. Inflation is very important in the real world, and our spending may depend on it as well as the interest rate.
Data Collection Year | Interest Rate | Inflation Rate | 2000 | 4.80% | -5.20% | 2001 | 2.38% | -2.10% | 2002 | 0.35% | -3.90% | 2003 | 0.07% | -1.50% | 2004 | 0.03% | -1.90% | 2005 | 1.26% | 0.20% | 2006 | 2.70% | 1.90% | 2007 | 2.42% | 2.30% | 2008 | 0.45% | 3.90% | 2009 | 0.01% | 2.10% | 2010 | 0.01% | 1% | 2011 | 0.01% | 2.90% | 2012 | 0.01% | 5.90% | 2013 | 0.01% | 3.70% |
This table shows