What is the purchasing power of the currency?

purchasing power of money - characteristic of the monetary unit of any country.It shows the amount of goods (or services) at the current level of prices and tariffs can be purchased at a unit of the currency.
classical definition of the term "purchasing power" is in the works of economists in the famous work of American mathematics professor at Yale University (USA), Irving Fisher, earned world renown, and in all the encyclopedias, legal, economic dictionaries.Under the purchasing power of money (currency) refers to the ability of the currency to be exchanged for a certain number of commercially available products and services.

Thus, this characteristic is filling the country's monetary unit mass of commodities.It is calculated as an index whose value is the reciprocal of the price index.It depends on the structure of trade and the value of the goods.

Economic Dictionary interprets the concept as the ratio of income and price levels.That is a fixed income rise in prices for goods and services led to a decrease in the purchasing power of each currency.The same correspondence exists for other economic indicators - cost of living index.

purchasing power of any currency - an important indicator for determining the exchange rate.Installing an equivalent course is impossible without knowledge of the purchasing power of each currency, t. E. The amount of wealth available to purchase on the market of any country in the national currency.

Until the 70s of the 20th century, this value was measured in gold.The amount of gold and its value in the currency were enshrined in the legislation of each state.For example, for a long time, the price of the dollar was equal to 1/35 of an ounce (international unit of weight of gold).The basis of the exchange rate of the comparison lay the gold content in units of different currencies.

Currently, gold is used instead of the "consumer basket", t. E. A specific set of goods and services.It is clear that the population of each country for the purchase of the same goods spends a different amount, indicating that the different purchasing power of local currencies.In addition, the purchasing power of the population depends on many other factors, chief among them - the ratio between the value of "market basket", and real wages.It is determined by the number of man-hours required for the purchase of a product.

purchasing power of the Russian ruble, according to experts, falls for the year by 15-25%.Finance, incorporated in the state budget to compensate for the costs of inflation, the end of the year, time to depreciate.The real growth of prices and tariffs of more than twice as fast as government funding.Given the constant backlog of salaries, allowances and pensions of the subsistence minimum we can talk about the fall of purchasing power for at least 30-35% per year.

Thus, according to analysts, the price of goods, services, and with them, respectively, and the purchasing power in different regions of Russia can vary significantly (8-16 times).E. In fact, hard currency with a single purchasing power in our country does not exist.

ruble exchange rate, according to the Central Bank, in the last 15 years at least 70% is supported by exports of raw materials (mainly oil and gas) and semi-finished products from it.Due to what, then, made the declared economic growth?Due to the growth of retail prices.All regions of the Federation in most industries there is a drop in production and commercial output, but rising prices suggest the supposedly developing economy.

rebalancing "supply and demand" in the commodity-money market policy of the state is necessary to curb the growth of the money supply and stimulate the production (eg, in China at the beginning of monetary reform).In the context of the policy of financial constraints, carried out by our country since 1991, a reduction in production volume, increases dramatically the share of exports of natural resources at dumping prices, which leads to a further collapse of the manufacturing sector of the economy.