Inflation Flashcards
A sustained increase in the general price level of goods and services in an economy over a period of time is what?
Inflation
What is the term when prices drop?
Deflation
When inflation continues but the rate of inflation gets smaller and smaller it’s considered what?
Disinflation
Inflation and hyperinflation are caused by an excessive growth of __________ supply.
Money
Who has the highest inflation with an annual inflation of 536.2%?
Venezuela
What is the target level of inflation in the US?
2.0%
Who introduced the practice of printing paper money to create fiat currency?
Song Dynasty China
What currency is a currency which has no inherent value in that it is not made from gold?
Fiat currency
Historically, large infusions of ______ or ________ into an economy also lead to inflation.
Gold
Silver
________ ________ and ________ ________ examined and debated currency devaluation on the price of goods.
David Hume
David Ricardo
Who is responsible for tracking and calculating inflation in the US?
The Bureau of Labor Statistics
The inflation rate is calculated by calculating movement or change in what index?
Consumer price index
What measures average changes in prices received by domestic producers for their output?
Producer price indices
A measure of core inflation which removes the most volatile components from a broad price index is what?
Core price indices
When measuring inflation from year to year economists will chose a base year and give it a value of ______ and compare inflation based on the base effect.
100
Inflation is also seasonally ____________ to adjust for growing demand during different seasons. (ie. More gas for heating during winter)
Adjusted
Low inflation reduces the severity of economic ____________ by enabling the labor market to adjust more quickly in a downturn.
Recessions
The adoption of fiat currency made much larger variations in the __________ of money possible.
Supply
To measure overall inflation the price change of a large “___________” of representative goods and services is measured.
Basket
The adoption of fiat currency made much larger variations in the supply of what possible?
Money
Central banks rely on what price indices when measuring inflationary impact of monetary policy?
Core price indices
An increase in the producer price indices would indicate an eventual increase in what indices?
Consumer price indices
When the value of the currency is lowered in contrast with its actual reserve its called a what?
Invisible tax
When measuring the CPI we only measure for _________ consumers, not rural.
Urban
When you take 72 and divide it by the inflation rate and get the amount in years the price will double, you used what rule?
Rule of 72
What percent of inflation is considered a manageable rate of inflation?
3%
If you fight unemployment, inflation gets worse. But if you fight inflation, unemployment gets worse during what?
Stagflation
The printing of money is closely regulated by whom?
The Federal Reserve
From the second half of the 15th century to the first half of the 17th, Western Europe experienced a major inflationary period known as what?
Price revolution
When unemployment is greater than ____% we have an unemployment problem.
4%
When inflation is greater than _____% we have an inflation problem.
2.9%
When you have a positive GDP gap the problem is what? What about when you have a negative GDP gap?
Inflation
Unemployment
What are the two types of cost push inflation?
Supply and demand shocks
Operating over the potential GDP creates what inflation?
Demand pull inflation
Operating below GDP potential is considered what problem?
Unemployment
