week 5
Inflation is the sustained and widespread increase in prices ingoods and services that lead causes are varied, but include the growth of money in circulation, which promotes greater demand, or the cost of production factors (raw materials , energy, wages, etc). If there is a continuing decline in prices is called deflation.


Inflation according to the degree or rate of increase in the average level of prices can be considered:
Moderate inflation. Moderate inflation refers to the slow increase in prices. When prices are relatively stable, people are wary of this,putting their money in bank accounts.
Runaway inflation. Runaway inflation occurs when prices increaserates two or three digits of 30, 120 or 240% within an average of one year. When it comes to establishing runaway inflation there are great economic changes.
Hyperinflation. It is an abnormal excess inflation which may reachup to 1000% per annum. This type of inflation announces that acountry is experiencing a severe economic crisis since, as money loses its value, purchasing power (the ability to purchase goodsand services with money)


causes of inflation


Monetary Inflation
When faced with a monetary inflation the money supply grows at arate exceeding the growth rate of demand for money. The maintheoretical basis of those applying this theory is the quantity theory of money.

The origins of the excess supply of money can be a monetizationof the deficit of the Government or otherwise.

Government Deficit Monetization
When the government fiscal deficit can be financed with debt,reducing international reserves, or printing money. From thestandpoint of governmental accounting printing money to finance the deficit is a Central Bank loan, ie, an asset of the Central Bank,so the balance is balanced it.


colombian`s inflation
The Consumer Price Index was 0.22 percentage points higher than in the same month of 2010.
In the same month of 2010 reached 0.69 percent. BetweenFebruary 2010 and January 2011 ie the last 12 months, the indexshowed a variation of 3.40 percent.
Two groups of goods and services showed growth above CPI inJanuary 2011: transport (1.73 percent) and food (1.61 percent).


summary of international trade


article about the theories of international trade agreement 
mercantilist theory is about  an economic theory which holds that the prosperity of a state is dependent upon its supply of  capital; that the global volumeof  international trade is "unchangeable;" and that one party may benefit only at the expense of another.
absolute advantage refers to the ability of a party (an individual, or firm, or country) to produce more of a good or service than competitors, using the same amount of resources 
comparative advantage says that two countries (or other kinds of parties, such as individuals or firms) can both gain from trade if, in the absence of trade, they have different relative costs for producing the same goods