Economic growth Flashcards
What’s the ideal inflation rate?
2-3%
What are some benefits of economic growth?
Consumption/production of goods and services,
What causes demand pull inflation?
Population growth, increased income, increased consumer confidence
What causes cost push inflation?
Increased oil prices/taxes/wages
Inflation
Persistent and appreciable rises in price levels, price increase to all goods and services over time
Headline rate of inflation
Unadjusted for anomalies, potentially misleading
Underlying inflation
Accounts for volatile factors/anomalies
CPI
Quarterly summary of all goods and services
How many categories are accounted for in the basket of goods?
11 groups, 33 subgroups, 90 classes
When is the cash rate reviewed?
1st Tuesday every month
What was the inflation rate from the 70s-80s?
8%
What was the inflation rate in the 90s?
3%
Who controls interest rates (and who has no say)?
Reserve bank of Australia, government independent
Price stability
Low inflation rates
Full employment
Everyone willing to work can find employment
