3.2 price stability

Question 1

inflation

Answer 1

inflation is a sustained increase in the general price level of goods and services in the economy

Question 2

inflation rate

Answer 2

the inflation rate is the percentage increase in the price level from one year to the next

Question 3

consumer price index (CPI)

Answer 3

the consumer price index (CPI) is an index that is designed to measure the average price changes of a fixed basket of consumption goods and services commonly purchased by resident households over time. it is widely used as a measure of consumer price inflation

Question 4

headline inflation

Answer 4

headline inflation is the overall inflation as measured by the changes in the CPI

Question 5

core inflation

Answer 5

core inflation refers to inflation that is typically measured by excluding items which tend to exhibit large price volatility

Question 6

disinflation

Answer 6

disinflation refers to a reduction in the rate of inflation, with inflation remaining positive

Question 7

stagflation

Answer 7

stagflation refers to a situation of high inflation, rising unemployment and low economic growth

Question 8

deflation

Answer 8

deflation is a sustained decrease in the general price level of goods and services in the economy

Question 9

demand-pull inflation

Answer 9

demand-pull inflation refers to rising prices caused by high and rising AD near or at the full employment level of national output

Question 10

cost-push inflation

Answer 10

cost-push inflation refers to rising prices caused by persistent increase in unit cost of production, for reasons not associated with an increase in AD