Inflation Flashcards
Inflation
continuous and considerable rise in prices in general
Consumer Price Index
an index that reflects the cost of a representative basket of consumer goods and services.
Headline inflation
The unadjusted CPI for all urban areas
Producer price index
an index that reflects the prices/cost at first level of the first significant transation
GDP Deflator
The difference between the Nominal GDP and the Real GDP
Bracket creep
When progressive income tax increases based on nominal prices and not real terms leading to individuals being worse off than before
Fiscal dividend
Increased government revenue from taxation through infaltion
Hyperinflation
When inflation rate is insanely high
Demand-pull inflation
When aggregate demand for goods and services increases while the aggregate supply remains the same
Cost-push inflation
When inflation is caused by cost of production
Stagflation
When both inflation and unemployment occur at the same tine
Underlying factors
Provide background against which the inflation process will occur
Initiating factors
Factors that trigger or intensify a particular inflation process
Propagating factors
Generates a sustained process of rising prices by sending imopulse through the economy
Conflict approach
