FINC311 Unit 3 Discussion - Inflation affects people's purchasing

FINC311 Unit 3 - Discussion Board

Primary Response: Within the Discussion Board area, write 300–500 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas.

For this Discussion Board, please complete the following:

Inflation affects people's purchasing power. There is a relationship between inflation and interest rates. There are nominal and real rates of interest. The nominal rate is the raw interest rate. The real rate is the interest rate that has been adjusted for inflation. Interest rates will rise and fall in correlation with inflation. Therefore, it directly impacts people's personal finances and their ability to borrow money.

Using what you have learned, respond to the following:

• Evaluate how the rate of inflation impacts personal financial decisions. (Think about your own experience and provide examples.)
• Evaluate how interest rates impact personal financial decisions. (Think about your own experience and provide examples.)
• Assess the current economic environment with respect to interest rates and inflation.