Inflation Flashcards
What is the cpi
A basket of 100,000 goods and services from 11 different categories both here and overseas. They are used to measure inflation rate
What is hyperinflation
Hyperinflation is the rapid increase of inflation over a very short time
What is cost inflation
Cost inflation is the rise in the general production costs of goods and services so companies raise total price in order to protect profit margins
What is demand inflation
Demand inflation is the rise in price of goods do to over demand and not enough supply
How does the government reduce demand inflation
They increase Interest rates and overall taxes in order to reduce disposable income and reduce total demanding power
How do governments reduce cost inflation
Reducing tariffs Reform of the labour market Encourage skilled migration Encourage apprentices Infrastructure projects Competition policy Reducing company tax
What causes demand inflation
Consumer confidence Income Good export condition Low interest rates Lower tax
What causes cost inflation
Higher wages Interest rates Taxes Lower efficiency Weaker competition Rising energy prices
What is inflation
The general increase in prices over a period of time
