Title: Impact of Inflation hike on Economy
Authors: Prinkesh Mistri
Reetika Aryan
Sakshi Mehta
Introduction: Rising prices are affecting the economy, affecting purchasing power and investment. This inflation wave impacts businesses, consumers, and businesses, leading to increased costs and uncertainty. Understanding these impacts is crucial for navigating the turbulent waters and ensuring economic stability. So in this research we studied about how inflation hikes affect the economy.
Objectives: To understand the underlying phenomena of this problem.
Literature review:
Research on the impact of inflation hikes on the economy suggests that while moderate inflation can stimulate economic activity, high or unpredictable inflation may lead to reduced consumer spending and affect business confidence. The relationship between inflation and various economic indicators, such as employment and investment, as well as the role of central banks in adjusting monetary policy should also be studied. The differential impact on different sectors and the overall complexity of factors involved underscore the need for nuanced analysis in understanding the consequences of inflation on the economy.
Testing of Hypothesis:
Ho: μ=3
H1: µ≠3
Data collection:
- Inflation hikes affect the purchasing power of middle-class family.
- There is a positive relation between inflation hike and economic well-being.
- Businesses have appropriately adjusted their prices in response to the current inflationary pressures.
- Inflation rise is directly affected to rise in saving and investing.
- Inflation should be in control.
These 5 questions are asked in google form to students and for every question standard deviation, standard error, mean and t-stat was calculated.
Data analysis:
- Inflation hikes affect the purchasing power of middle-class family.
S.D.= 0.88 S.E.= 0.09 Mean= 4.05 t-stat= 12
- There is a positive relation between inflation hike and economic well-being.
S.D.= 0.96 S.E.= 0.10 Mean= 3.43 t-stat= 4.54
- Businesses have appropriately adjusted their prices in response to the current inflationary pressures.
S.D.= 0.95 S.E.= 0.09 Mean= 3.38 t-stat= 4.04
- Inflation rise is directly affected to rise in saving and investing.
S.D.= 1.13 S.E.= 0.11 Mean= 3.60 t-stat= 5.35
- Inflation should be in control.
S.D.= 0.85 S.E.= 0.08 Mean= 4.15 t-stat= 13.63
Conclusion:
- Inflation hikes affect the purchasing power of middle-class family.
- t-stat is 12 which means we accept the hypothesis and t is positive more than 1.96. It means Inflation hikes affect the purchasing power of middle-class family.
- There is a positive relation between inflation hike and economic well-being.
- t-stat is 4.54 which means we accept the hypothesis and t is Positive more than 1.96. It means positive relation between inflation hike and economic well-being.
- Businesses have appropriately adjusted their prices in response to the current inflationary pressures.
- t-stat is 4.04 which means we accept the hypothesis and its positive more than 1.96. It means Businesses have appropriately adjusted their prices in response to the current inflationary pressures.
- Inflation rise is directly affected to rise in saving and investing.
- T-stat is 5.35 which means we accept the hypothesis and its positive more than 1.96. It means Inflation rise is directly affected to rise in saving and investing.
- Inflation should be in control.
- T-stat is 13.63 which means we accept the hypothesis and its positive more than 1.96. It means Inflation should be in control.
References:
Quicken Loans. (2023, October 26). The effects of inflation.
NetSuite. (2023, October 26). The effect of inflation on business.