3.2(3) Price Stability

Question 1

Inflation

Answer 1

Sustained increase in the general price level of goods and services in the economy.

Question 2

Strato-inflation/Galloping inflation/Hyperinflation

Answer 2

Rapidly rising prices, with double-digit inflation rates or above.

Question 3

Disinflation

Answer 3

Reduced, positive rate of inflation.

Question 4

Stagflation

Answer 4

Situation of high inflation, rising unemployment and low economic growth.

Question 5

Headline inflation

Answer 5

Overall inflation as measured by changes in CPI.

Question 6

Core inflation

Answer 6

Inflation as measured by excluding items which tend to exhibit large price volatility and are largely influenced by supply-side disturbances or changes in government policies.

Question 7

Deflation

Answer 7

Sustained decrease in the general price level of goods and services in the economy.

Question 8

Consumer Price Index (CPI)

Answer 8

Measures the average price changes of a fixed basket of consumption goods and services commonly purchased by resident households over time.

Question 9

Demand-pull inflation

Answer 9

Rising prices caused by rising AD near or at full employment level of national output.

Question 10

Cost-push inflation

Answer 10

Rising prices caused by persistent increases in unit cost of production, for reasons not associated with an increase in AD.