A price swing occurs when the price, or the market value, for several different goods rises, dips, or remains the same. When prices rise over certain periods of time, an exchange is made through price changes among sellers and buyers of these goods, resulting in a redistribution of the economic value in the economy. A price swing can also lead to increased economic production, a contraction (recovery), or decreases (depression).
When it comes to currency, it is necessary to distinguish between a true price change and an inflated or deflationary price change. A true change occurs when an item is cheaper or cheaper but is worth the same or less of the original price. Thus, price decreases. A true price change occurs when an item is actually more expensive to produce because of factors such as increased production costs, or because of a shift in the market or a decrease in demand.
This distinction is crucial, because when one party perceives that the price for an item has shifted, they can take steps to avoid the loss of purchasing power and increase or maintain purchasing power by purchasing the items again if necessary.
The following chart shows three examples of actual price swings as measured by the Bureau of Labor Statistics. It assumes that all three figures in the chart were calculated according to the current market value of each good.
For a dollar today, $7.49, a price of one gram of gold would be $1,300 in March 1913. In today’s dollars, the price of the gram of gold would be $9,938 today.
The following chart shows an example of a price change that would have happened in March 1913 if the gold prices were, in fact, the current ones. The price of the gram of gold would be lower today because gold has since been significantly devalued, and hence, less expensive today.
The following chart shows that a shift in the price of a good would have led to a shift in the price of its components. For instance, a drop in demand for gold means less production for that specific good.
In general, because money, goods, and services can be valued less as a result of a change in general prices, the amount of money, goods, and services a party might gain or lose depends upon their relative positions and relative positions of those goods and their components.
As an example, consider the amount of gold mined out of each of the two ounces that were mined from the ground to be used for the production of U