Inflation

Question 1

Def

Answer 1

A sustained increase in the general level of prices

Question 2

Deflation

Answer 2

A sustained decrease in the general level of price

Question 3

Disflation

Answer 3

A fall in the rate of inflation

Question 4

Core inflation

Answer 4

Inflation measured without the most volatile prices

Question 5

Creeping inflation

Answer 5

Inflation begins to rise so slowly that people don’t realise

Question 6

Hyperinflation

Answer 6

Very high inflation typically in excess of 100%

Question 7

Anticipated inflation

Answer 7

Inflation that economic agents except and factor that in their decisions

Question 8

Unanticipated inflation

Answer 8

Inflation that is higher than economic agents realise

Question 9

Demand push inflation

Answer 9

Average price experience a sustained increase in prices due to an increase of aggregate demand

Question 10

Cosh push inflation

Answer 10

Average price experienced a sustained increase because aggregate supply leading to rising costs.

Question 11

Cost of inflation

Answer 11

Cost of updating info
Erodes the value of currency
Wider economic costs
Psychological cost
International competiveness

Question 12

Benefit of inflation

Answer 12

Relative price can adjust
Firms overcome the problem of price being sticky downwards