Inflation Basics
The general rise in prices over time is called this.
Inflation
This type of inflation occurs when demand for goods and services exceeds supply.
demand-pull inflation
This government index tracks changes in the cost of everyday goods and services.
the Consumer Price Index (CPI)
This South American country saw hyperinflation exceed 1,000,000% in 2018.
Venezuela
When inflation rises, this happens to the purchasing power of money.
it decreases
The opposite of inflation, when prices fall instead of rising.
What is deflation
Rising production costs cause this type of inflation.
cost-push inflation
This inflation measure excludes food and energy prices due to their volatility.
core inflation
The German economy collapsed in the 1920s due to this extreme form of inflation.
hyperinflation
Inflation can be good for people who have this kind of loan.
a fixed-rate loan
The term for extreme, rapid inflation, often seen in struggling economies.
hyperinflation?
An increase in the money supply can lead to inflation because of this economic principle.
What is too much money chasing too few goods
The Federal Reserve’s preferred measure of inflation is this index.
the Personal Consumption Expenditures (PCE) Index
The U.S. experienced its highest inflation rate in modern history during this decade.
the 1970s
This type of income struggles the most with inflation since it doesn’t automatically increase.
fixed income
The percentage increase in the price of goods and services over a specific time is known as this.
Inflation Rate
When businesses and workers expect future inflation and raise prices or wages in advance, this happens.
the wage-price spiral
Inflation is usually measured over this time period
a year
The Great Depression was followed by a period of this, where inflation was very low or negative.
deflation
People invest in this precious metal to protect their wealth from inflation.
gold
This is the most common economic policy tool used by governments to control inflation.
What is monetary policy
This global event in the 1970s caused high inflation due to rising oil prices.
Oil Crisis
If inflation is higher than wage growth, people experience this economic hardship.
a decrease in purchasing power
In 1980, the Federal Reserve raised this to over 20% to combat inflation.
the interest rate
This financial strategy helps consumers handle rising prices by adjusting their spending habits.
budgeting