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Mattius_
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when a price of $56.795 is rounded to $56.80 money is created... would you say this has a negligable impact upon our economy?
Does Rounding Prices Create Inflation and Impact the Economy?
- Thread starter Mattius_
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- Inflation
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SUMMARY
The discussion centers on the impact of rounding prices on inflation and the economy. Participants argue that rounding prices, such as changing $56.795 to $56.80, does not create new money but rather reflects accurate bookkeeping. A notable point raised is the historical context of banking transactions, where the shift to immediate updates led to significant amounts of money seemingly disappearing from the economy, attributed to dwell time rather than rounding. The conversation highlights the complexity of rounding mechanisms and their perceived effects on economic metrics.
PREREQUISITES- Understanding of basic economic principles, particularly inflation and money supply.
- Familiarity with banking transaction processes and their evolution over time.
- Knowledge of rounding rules in numerical data processing.
- Awareness of the concept of dwell time in financial transactions.
- Research the effects of rounding on financial reporting accuracy.
- Explore the historical impact of banking transaction updates on economic stability.
- Learn about the mathematical principles behind rounding in financial calculations.
- Investigate the concept of dwell time and its implications in modern banking systems.
Economists, financial analysts, banking professionals, and anyone interested in the relationship between pricing strategies and economic indicators.