Inflation

Question 1

Inflation

Answer 1

Is the term used to describe a situation where the general or aggregate levels of prices is rising

Question 2

Inflation rate

Answer 2

Is the percentage change in the price level from one period to the next period

Question 3

Creeping inflation

Answer 3

When prices rise 3% a year or less. When prices increase 2% or less, it benefits economic growth

Question 4

Running inflation

Answer 4

When inflation starts to rise at a significant rate. It is usually defined as a rate between 10% and 20% a year. At this rate, inflation is imposing significant costs on the economy and could easily start to creep higher

Question 5

Hyper-Inflation

Answer 5

Rapidly rising inflation typically more than 50%

Question 6

Stagflation

Answer 6

A situation in which a nation’s economy is characterised by relatively high price inflation and low (or negative) rates of economic growth

Question 7

Demand-Pull Inflation

Answer 7

Occurs when the total demand for goods and services is greater than the total supply of goods and services available for sale

Question 8

Cost-Push Inflation

Answer 8

Is when the general price level is “pushed up” by increases in the costs of production

Question 9

Nominal GDP

Answer 9

Or GDP at current prices is a measure of economic activity based on the current prices of the goods and services produced. Does NOT correct for inflation

Question 10

Real GDP

Answer 10

Or GDP at constant prices measure economic activity in the prices of a fixed or base year. Does correct for inflation

Question 11

Deflation

Answer 11

Is a fall in the general level of prices

Question 12

Disinflation

Answer 12

A slowing of the inflation rate over a period of time

Question 13

Phillips Curve

Answer 13

Illustrates an inverse relationship between unemployment growth and inflation