Types
What type of inflation occurs when demand for goods and services exceeds supply?
Demand-pull inflation
What does "CPI" stand for when measuring inflation?
Consumer Price Index
Which country experienced hyperinflation in the 1920s after World War I?
Germany (Weimar Republic)
What happens to the purchasing power of money during inflation?
It decreases
Which institution is primarily responsible for controlling inflation in most countries?
The central bank
What type of inflation is caused by an increase in production costs, such as wages or raw materials?
Cost-push inflation
What does "PPI" stand for when measuring inflation?
Producer Price Index (PPI)
Which decade in the U.S, is known for a high period of inflation, with a peak of over 13% in 1980?
the 1970s
How does inflation generally affect the value of savings held in cash?
It erodes the value of savings
What is the main tool used by central banks to manage inflation?
Interest rates
What is the term for an extreme, out-of-control rise in prices, often exceeding 50% per month?
Hyperinflation
What is the name of the index used to change Social Security benefits for inflation in the U.S?
Cost of Living Adjustment (COLA).
What global event caused deflation rather than inflation during the 1930s?
The Great Depression
What effect does unanticipated inflation have on lenders and buyers?
What term describes the use of government spending and tax policies to influence inflation?
Fiscal policy
What is the term for inflation that occurs due to excessive expansion of the money supply by a government?
Monetary inflation
Which organization uses the Harmonized Index of Consumer Prices (HICP) to measure inflation across countries?
The European Union
What was the 1971 decision when the U.S. stopped using the gold standard, causing inflation?
The Nixon Shock
What term refers to the phenomenon where wages increase, leading to higher prices, which in turn leads to demands or higher wages?
Wage-price spiral
Which U.S central bank raised interest rates dramatically in the early 1980s to combat inflation
The Federal Reserve