CHAPTER 34 INFLATION

Question 1

Anticipated inflation

Answer 1

increases in prices which economic actors are able to predict with accuracy

Question 2

Consumer prices index (CPI)

Answer 2

A measure of the price level used across the European union and used by the bank of England to measure inflation against its targets.

Question 3

Cost-push inflation

Answer 3

Inflation caused by increases In the costs of production in the economy

Question 4

Deflation

Answer 4

A fall in the price level

Question 5

Demand- pull inflation

Answer 5

Inflation which is caused by excess demand in the economy

Question 6

Disinflation

Answer 6

A fall in the rate of inflation

Question 7

Hyper-inflation

Answer 7

Large increases in the price level

Question 8

Indexation

Answer 8

Adjusting the value of economic variables such as wages or the rate of interest in line with inflation

Question 9

Inflation

Answer 9

A general rise in price

Question 10

Price level

Answer 10

The average price of goods and services in the economy

Question 11

Retail price index (RPI)

Answer 11

A measure of the price level which has been calculated in the UK for 60 years and is used in a variety of contexts such as by the governments to index welfare benefits

Question 12

Unanticipated inflation

Answer 12

Increases in price which economic actors like consumers and firms fail to predict accurately and so their decisions are based on poor information.