Price stability

Question 1

What are the3 types of inflation

Answer 1

Demand pull
Cost push
Monetary

Question 2

Consequences of inflation for consumers

Answer 2

Loss of consumer confidence
Shoe leather costs-people spend more
Real incomes may fall
Consumers who are debtors gain
Income redistribution prblems

Question 3

Consequences of inflation for prodouces

Answer 3

More flexibility in setting wages and prices
Menu costs
Labour market conflicts
Unemployment
Producers who are creditors(loaners) lose
Producers lack business confidence

Question 4

Consequences of inflation for government

Answer 4

Government gains as debtor
Government spends more as a provider of benefits
Government spends more as a majoy employer
Government raises more in tax
Government policies need to combat inflation