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12 Cards in this Set
- Front
- Back
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Inflation
How to find it |
An increase in the price level, or average level of prices
Inflation rate= CPI- CPI earlier year/CPI earlier year * 100 187-180/180=3.89% |
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Consumer Price Index (CPI)
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is used to measure the price level
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Aggregate demand
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represents the demand side of the economy
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Aggregate supply
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represents the supply side of the economy
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demand-side inflation
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an increase in the price level that originates on the demand side of the economy
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supply-side inflation
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an increase in the price level that originates on the supply side of the economy
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Velocity
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the average number of times a dollar is spent to buy final goods and services in a year
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The simple quantity Theory of money
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presents a clear picture of what cause inflation
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The Exchange Equation
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M*V=P*Q
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Simple Quantity theory of money
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A theory that predicts that changes in the price level will be strictly proportional to changes in the money supply
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Hedge
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to try to avoid or lessen a loss by taking some counterbalancing action
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Deflation
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a decrease in the price level, or average level of prices
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