Maths Exploration

Launch

The Inflation rate alterations every month and year, impacting on the value of the bucks in the country. Inflation reflects a reduction in the purchasing power every unit of money, causing the price of goods and services to enhance. Although people manage to see pumpiing as " evil”, but it is a required side-effect of a growing nation, as economist sees that a small (< 2%-3%) regular amount of inflation is actually good. With no inflation the amount paid in the market will fall out of balance, if everything is cheap including costs of creation, the resources wont be much as everyone will mass buy, leading to the resources to perform out soon. Aim

In this exploration, we are going to see how the eye rates your bank gives all of us will never catch up with inflation, simply by comparing the interest rates and the inflation price for the past a decade. We will also explore a saving plan in a lender, and assess the gain from the prepare with the pumpiing. I chose this kind of to be my own exploration since last summer when I was creating a bank account, the representative of the bank arrived up to me personally and attempted to persuade me personally into joining a saving plan. Through the entire whole period he burdened on saying the interest price has been really low in the past years, and without joining his prepare I was quite simply losing money each day. So I was curious whether what this individual said was true or perhaps was it really a technique for me to commit my funds with him. Inflation is vital in the real world, and the spending may well depend on it as well as the interest. Data Collection

Year| Interest Rate| Pumpiing Rate

2000| 4. 80%| -5. twenty percent

2001| installment payments on your 38%| -2. 10%

2002| 0. 35%| -3. 90%

2003| 0. 07%| -1. 50%

2004| 0. 03%| -1. 90%

2005| 1 . 26%| 0. 20%

2006| 2 . 70%| 1 . 90%

2007| 2 . 42%| 2 . 30%

2008| 0. 45%| 3. 90%

2009| 0. 01%| installment payments on your 10%

2010| 0. 01%| 1%

2011| 0. 01%| 2 . 90%

2012| 0. 01%| five. 90%

2013| 0. 01%| 3. 70%

This desk shows the inflation price and rates of interest in the past a decade. All of the info was gathered from the website tradingeconomics. com which consolidates data from the Hong Kong Census and Stats Department. Even as we can see, the inflation charge has been elevating from deflation to a high inflation. In the meantime the interest prices has been decreasing gradually and remained at 0. 01% for the last your five years. Just by looking at the figures, the eye rate have been lower than the inflation price meaning that we've been losing money if we don't invest our funds.

Mathematical Method

The scatter on the right(Figure 1) reveals the relationship between interest rate and inflation rate. I selected to do this because it helps us to see if there is any confident or negative relationship between two factors. By finding the Pearson product-moment correlation pourcentage, R, we can know whether the relationship is strong or perhaps weak.

Figure 1 Relationship between interest rate and inflation price

The formulation for finding Pearson's product-moment relationship coefficient, 3rd there’s r, is r=SxySxSy

To find the Sxy, we utilize following formula:

Sxy=xy-xyn

=14. 8%×-5. 2%+2. 38%×-2. 1%+…-4. 8%+2. 38%+…-5. 2+-2. 1+…14 =-0. 001826-0. 14510. 09314

=-0. 002789878571

And to find Sx, we use the following equation

Sx=x2-(x)2n

=0. 2304%+0. 056644%+0. 001225%+…-(4. 8%+2. 38%+0. 35%+…)214

=0. 00437697-0. 0210540114

=0. 05360141922

Then we discover Sy, making use of the following equation

Sy=y2-(y)2n

=0. 2704%+0. 441%+0. 1521%+…--5. 2±2. 1±3. 9+…214

=0. 013899-0. 00864914

=0. 1152441508

Today we make use of the Pearson ‘s product instant coefficient

r=SxySxSy

=-0. 0027898785710. 053601419220. 1152441508

=-0. 4516376305

≈ -0. 452

Inside the scatter plan the line of best fit mountains downward which means that it has a unfavorable relationship. This kind of shows that since the interest rate increases, the inflation level decreases. This is simply not a very good situation for the citizens because means that when inflation charge is large we suffer from a low interest...

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