Inflation Basics
This economic term refers to a sustained increase in the general price level of goods and services, representing a decline in the purchasing power of money
What is inflation?
This index measures the average change over time in prices paid by urban consumers for a representative basket of goods and services.
What is the Consumer Price Index (CPI)?
This type of inflation is caused by excess aggregate demand and is represented by a rightward shift of the AD curve.
What is demand-pull inflation?
A.W. Phillips published his seminal 1958 paper documenting an inverse relationship between wage inflation and unemployment using data from this country.
What is the United Kingdom?
As of January 2026, the Central Bank of Uzbekistan's key policy rate stands at this percentage, unchanged since March 2025.
What is 14%?
Unlike inflation, this term describes a decrease in the general price level of goods and services in an economy.
What is deflation?
This formula calculates the annual inflation rate using the current year's CPI (CPI₁) and the prior year's CPI (CPI₀).
What is Inflation Rate = [(CPI₁ – CPI₀) / CPI₀] × 100%?
This type of inflation results from rising production costs, such as higher oil prices or wages, and is represented by a leftward shift of the AS curve.
What is cost-push (supply-side) inflation?
The Phillips curve illustrates an inverse relationship between these two macroeconomic variables.
What are the unemployment rate and the inflation rate?
Uzbekistan's annual inflation rate in 2025 reached this figure — the lowest in nine years.
What is 7.3%?
According to the quantity theory of money, inflation is derived from this equation, where M = money supply, V = velocity of money, P = price level, and Y = real output.
What is MV = PY?
Known as the "Rule of 70," dividing 70 by the annual inflation rate yields this result.
What is the number of years it takes for the price level to double?
This classification of inflation, characterized by a rate exceeding 50% per month, is the most extreme form recognized in economic theory.
What is hyperinflation?
In 1968, these two economists independently introduced the expectations-augmented Phillips curve and challenged the notion of a stable long-run inflation-unemployment tradeoff.
Who are Milton Friedman and Edmund Phelps?
The Central Bank of Uzbekistan operates under this monetary policy framework with a medium-term inflation target of 5%.
What is an inflation targeting regime?
Unexpectedly high inflation benefits this party in a lending relationship, while harming the other.
Who are borrowers (debtors)?
This measure is calculated by dividing Nominal GDP by Real GDP and multiplying by 100, and is the broadest price measure covering all domestically produced output.
What is the GDP Deflator?
This dangerous feedback mechanism, in which higher wages raise both consumer demand and production costs simultaneously, can perpetuate inflation indefinitely.
What is the wage-price spiral?
This acronym refers to the unemployment rate at which inflation neither accelerates nor decelerates.
What is NAIRU (Non-Accelerating Inflation Rate of Unemployment)?
In 2025, Uzbekistan's national currency appreciated by this percentage, reducing imported inflation and lowering dollarization.
What is 6.9%?
According to the quantity theory of money, the price level is directly proportional to total monetary expenditure and inversely proportional to this variable.
What is real output (Y)?
This index measures prices received by producers at various stages of production and serves as a leading indicator of consumer inflation.
What is the Producer Price Index (PPI)?
Built-in inflation arises from this concept, whereby workers and firms base wage and price decisions on recent inflation experience, creating self-fulfilling expectations.
What are adaptive expectations?
The convexity of the Phillips curve implies that this economic condition is more inflationary than excess supply is disinflationary — a key asymmetry with significant policy implications.
What is excess demand?
Some empirical studies indicate that to reduce inflation by 2 percentage points, an economy must sacrifice approximately this percentage of annual GDP.
What is 5% of annual GDP?