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8 Cards in this Set
- Front
- Back
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What is Inflation? |
The persistant and appreciable rise in general prices |
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What is the CPI? |
The Consumer Price Index summarises the overall change in price over a large 'basket' of essential goods. |
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What is CPI used for? |
As a comparison tool for inflation |
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List some of the major groups in the CPI |
Housing Health Education Communication Transport |
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What are the two types of Inflation |
Cost Push Inflation Demand Pull inflation |
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What is Demand Pull inflation? |
'Too much money chasing too few goods' A increase in demand cause by high levels of aggregate expenditure due to rising wages. Eg: A rise in Farrari because wages have shot up.
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What is Cost Push Inflation? |
Occurs when rising production costs are passed on to consumers who then have to pay higher prices for goods and services. |
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What are the 4 major effects of Inflation? |
1.) Decrease in Economic efficiency 2.) Premotes Uncertainty 3.) Creates a lack of confidence 4.) Reduces purchasing power |
