Term
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Definition
| is the persistent increase in overall average of prices |
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Term
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Definition
| overall change in prices excluding food and energy |
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Definition
| is the opposite of inflation, overall consumer prices fall |
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Definition
| means declining rate of inflation through time |
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Definition
| means out of control inflation |
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Term
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Definition
| simultaneous occurance of high inflation and high unempliment |
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Term
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Definition
| a measure of the average prices of selected goods and services |
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Definition
| the percentage increase in the price level from one year to the next |
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Term
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Definition
-demand-pull inflation, caused by excess
-cost- push inflation, caused by persistent increase in prices of strategic resources
-monetary inflation, caused by too much money, excess liquidity |
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Term
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Definition
a weighted avaerage of prices of a representative sample of goods ans services- known as market basket- typically purchased by American consumers
- it is designed to measure the changes in the cost of living for American households |
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Term
| CPI is a fixed-weight index, so it has some shortcomings |
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Definition
-When prices change over time consumers find cheaper substitutes for expensive products
-data problems(correct prices paid by consumers may not be the same as prices used by BLS when calculating CPI
-CPI shows the overall average movements in prices. So some prices increase faster than overall average & others may change at slower rate |
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Term
| effects of unanticipated inflation |
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Definition
-distorts the long-term projects and contracts
-diminishes the value of household savings
-frequent re-pricing of goods and services, menu costs
-effects the flow of exports and imports
-prices lose thier economic meaning
-causes misallocation of resources, diversion of resources into speculative activites
-redistribution of wealth |
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Term
| redistribution effects of inflation for the losers |
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Definition
-creditors
-tax payer
-savers
-exporters
-fixed-income people
-people who fail to anticipate inflation |
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Term
| redistribution effects of inflation for winners |
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Definition
-debtors
-government, taxes
-people whose income increases faster than the rate of inflation
-those who correctly forecast inflation |
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Term
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Definition
-wage and price control
-restraints on the growth of aggregate demand
-restriants on money and credit |
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Term
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Definition
| the nomial interest rate adjusted for inflation |
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Term
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Definition
| a technique to adjust money payments by means of a price index to maintain the purchasing power of a monetary amount after inflation |
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