What Causes Increases in Price Level?

Price increase is a term that refers to an increase in prices. The value of goods increases, and people spend more money to buy goods.

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Qiufeng Jiuding Institute of Public Affairs Researcher

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The price increase reserve is for investment projects with a long construction period. During the construction period, the prices of materials, labor, equipment, and construction machinery may increase, as well as changes in rates, interest rates, and exchange rates, resulting in increased project investment. Expenses that need to be reserved in advance, also known as reserve for spreads or unforeseen fees for price changes.

Calculation formula: PF = It [(1 + f) ^ m (1 + f) ^ 0.5 (1 + f) ^ (t-1) -1]

PF-price reserve fee;

n--the number of years in the construction period;

IT--The amount of investment plan for the t-year period during the construction period, including engineering costs, other construction costs and basic reserve costs, that is, static investment for the t-year period;

f--the average annual investment price increase rate;

m--the early years of construction (from the preparation of estimates to the start of construction, unit: year).