Macroeconomic Objectives Flashcards
What is inflation?
Inflation is a general rise in prices.
What is deflation?
Deflation is a general fall in prices?
What is disinflation?
Disinflation is a fall in the rate of inflation.
What is hyperinflation?
Hyperinflation occurs when there are large increases in the price level?
What is reflation?
Reflation is the
What is stagflation?
Stagflation refers to high inflation when the economy is in recession.
What are two measures of the price level?
The Consumer Price Index and the Retail Price Index are two measures of the price level.
How are price indices calculated?
Each year, a few thousand households are asked to report their expenditure for one month as part of the Living Costs and Food Survey. The results are used to calculate average household expenditure and create a basket of goods. Surveyors record the prices of the basket of goods every month in different areas and in different stores. This information is used to create an weighted index. Price changes are weighted in relation to the the proprotion of income spent on those goods.
What are some criticisms of price indices?
a
What is demand pull inflation?
b
What is cost push inflation?
c
What are some costs of high inflation?
d
What are some costs of deflation?
e
What are some benefits of low inflation?
f
Who are the unemployed?
g
