Today, everyone is talking about inflation and students may wonder why they should study it if it will be there anyway.
There is some truth in that. Inflation is indeed always present in our economy even though we aren't always aware of it.
However, that doesn't mean that school and college students shouldn't learn about it. On the contrary, the knowledge of inflation can even be very useful.
When they finish college and get their HSC, students will start their adult life and, among other things, they will have to plan their budgets to make ends meet at the end of the month.
Even basic skills in economics and the understanding of such crucial economics concepts as inflation can help them with that.
For example, depending on the inflation rate and the monetary policy currently in place, it may be more or less easier to take out loans and we may all need a loan at some point.
So, even if you don't see the point of taking an economics course right now, you should think twice about it.
And to help you fully get the importance of economics and inflation, in particular, Superprof has gathered a few interesting facts for you.
For more information on inflation, have a look at our article.
Inflation and monetary policy
When planning your budget, the current monetary policy of the Reserve Bank can be an important element to take into consideration. What does it have to do with inflation? Well, the Reserve Bank actually adjust its monetary policy to the current inflation rate in the economy.
To see the connection, you need to know a few things about inflation and economics that you may not have learnt during your HSC year.
First of all, we talk about inflation when the general price level in an economy is rising. That can happen for different reasons and one of the factors is the money supply.
If there is a lot of money to buy goods and services, money itself becomes less valuable and so, you can buy less with it.
When, on the other hand, money is more difficult to get, the increase in prices is likely to slow down since people will not be that eager to part with what they have, so there will be a bigger demand for money.
Now, as it happens, the central bank can regulate the availability of money in the economy by changing the policy interest rate. With high interest rates, money becomes more difficult to borrow and with low interest rates, the opposite happens.
So, even though the interest rate is not the only economic factor of inflation, it is still a powerful tool with which the Reserve Bank can influence inflation, which is by the way described in more detail in our other article.
On the other hand, inflation can have an impact on the Reserve Bank's monetary policy when it gets too high due to external circumstances.
By following the two indicators, you can learn to predict how prices and interest rates will behave in the near future and draw up your budget accordingly.
Living with inflation
We have already said that the central bank of Australia can try to regulate inflation through its monetary policy, but does it want to get rid of inflation altogether?
For ordinary people, that might seem to be a logical thing to do because without inflation the price level would not grow and the cost of living would be stable. That is, however, not how economics works.
Even though inflation is hard for us and we have to pay higher prices for the same products with time, negative inflation or deflation would even be worse.
For instance, imagine how people would plan their budget if inflation were negative and the price level actually fell.
No one would probably buy anything at the moment since they would know that the next week, they can have it for a lower price.
That would significantly reduce demand and consumption and companies would struggle to have enough revenue to maintain their activities.
If deflation lasted for one week, it would probably not cause big disruptions but in the long term, it can have rather dire consequences for both the society and the economy, leading to such phenomena as deficit and unemployment.
In order to avoid that risk, the central bank prefers to keep inflation at a low level instead of aiming for zero inflation. And if you want to understand how inflation is calculated, check out to our article on the topic.
What that policy means for us as consumers is that prices will keep rising in any case, so when you consider buying something expensive, it may be better to take out a loan instead of saving.
With good knowledge of economics and prices, you can assess all the pros and cons in order to make rational decisions on your budget.
Good budgeting can help you be less vulnerable to inflation and bring you mental peace since you'll know that your finances are healthy.
Keep learning about economics
So far, we have looked at just one economic concept which is inflation, however, there are many others that it is related to.
Students who choose economics as their HSC subject will probably also know such terms as GDP, economic growth, purchasing power and many others.
Learning about inflation and its causes can be a way for students to better understand those concepts too and acquire a deeper knowledge of economics as a science.
Economics is not just important to get your HSC and enter university but you can apply your skills to real-life situations, work and business.
What's more, learning economics can be simply interesting for students. It can be a way to make sense of global events, analyse society and raise your awareness of different issues.
So studying inflation can be just a starting point for you to keep further exploring economics whether as part of your HSC preparation or simply as a hobby.
With good tutors, students can quickly realise that economics is not as boring as we often imagine it. It can include numerous case studies and practical exercises that help us put theory into practice and once you've got its basics, learning finance, management and numerous other related disciplines will be a walk in the park for you.
Why learn about inflation with tutors?
We have talked a lot about the usefulness of economics but we also have to admit that it is not always an easy discipline for students.
Its theories can often seem counterintuitive to students, such as why zero inflation is bad, so it may take time before you get used to its logic.
Private tutoring can be a good way to get help with the most difficult economic concepts and learn about inflation and other processes in a more dynamic way.
One of the biggest advantages of taking lessons with a tutor is that they will tailor each lesson to the exact needs of the student and make sure they keep up in class.
If your goal is to achieve a good grade for HSC economics, you can find a tutor who'll know how the HSC exams work and can help you prepare for the kinds of assignments you'll need to deal with.
On the other hand, those who take tutoring lessons out of curiosity or for personal use can focus on more practical activities which would be irrelevant for HSC-year students.
Tutoring gives students a lot of flexibility in organising their lessons. They can meet their tutor one or several times a week at any time in the day and keep learning throughout the year without stress.
And if you have difficulty finding a good economics tutor for yourself or your child, Superprof is there to help you. What's more, you can read about the concept of inflation on our blog.
Book your first lesson on inflation
Tutoring lessons can be fun but you need to find your tutor in the first place. We at Superprof know how difficult it can be if you only rely on traditional means and that is why we decided to help you.
Superprof is a tutoring platform where thousands of economics and HSC tutors offer tutoring services all across Australia and online. On each tutor's profile, you will be provided with information about the price of their lessons and their teaching methods, while other students' reviews will help you learn additional details.
All of our tutors are reachable by chat, email and phone, so you can ask them any question you have before organising your first lesson directly with them.
What's especially great about all that is that most Superprof tutors offer their first lesson for free, so in addition to all the information on the website, you will have an opportunity to get to know them in person before hiring them.
This way, you will make sure to enjoy your tutoring lessons with them and improve your knowledge of inflation, growth and market supply in a very brief time.
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