Causes
What is the main driver of demand-pull inflation?
Excessive demand for goods and services.
2 parties lose during inflation
Fixed-income earners.
What type of inflation is caused by excessive consumer demand?
Demand-pull inflation.
What is the most commonly used index to measure inflation?
CPI
How does investing in education promote economic growth?
It improves workforce productivity
Name a cause of economic growth
Rising production output
What is the benefit and cost of inflation?
Increasing revenue and reducing purchasing power
decline in economic activity
recession
What does the Producer Price Index (PPI) measure?
Changes in the prices of goods and services sold by producers.
How can infrastructure development stabilize inflation and boost growth?
It reduces production and transportation costs, improving efficiency.
How can government spending lead to inflation?
Increased public expenditure can boost demand, causing demand-pull inflation
How does inflation benefit borrowers?
It reduces the real value of their debt.
What is the term for extremely high and uncontrollable inflation?
Hyperinflation.
measure rise in GDP
What is a common government/fiscal policy to reduce inflation?
Reducing government spending or increasing taxes.
Why might global conflicts cause inflation?
They reduce the supply of goods, increasing prices (cost-push inflation).
What impact does high inflation have on savings?
It erodes the purchasing power of saved money.
What is stagflation?
A combination of high inflation and high unemployment.
How is "real GDP" different from "nominal GDP"?
Real GDP is adjusted for inflation, while nominal GDP is not.
How do international trade policies help manage inflation?
By allowing cheaper imports to lower production costs.
What role does currency depreciation play in inflation?
It makes imports more expensive, raising overall price levels.
explain economic growth impact on unemployment
experience an increase in sales revenue
the highest point in a business cycle, between the end of an expansion and the beginning of a contraction
peak
How to measure GDP?
calculating the aggregate demand
Name a policy that balances inflation control and growth
Promoting technological innovation to increase productivity and reduce costs.