chapter 24- inflation&delation

Question 1

definition of inflation

Answer 1

inflation is the sustained rise in the general level of prices of goods and services over time as measured by a consumer price index

Question 2

definition of hyperinflation

Answer 2

hyperinflation refers to the very high rates of inflation that are out of control, causing average prices in the economy to rise rapidly

Question 3

definition of deflation

Answer 3

deflation is the sustained fall in the general price level in an economy over time.(negative inflation)

Question 4

definition of CPI

Answer 4

the consumer price index is a weighted index of consumer prices in the economy over time. it is used to measure the cost of living for an average household

Question 5

definition of base year

Answer 5

a base year refers to the starting year when calculating a price index

Question 6

definition of cost-push inflation

Answer 6

cost-push inflation is a cause of inflation, triggered by higher costs of production, thus forcing up prices

Question 7

definition of demand-pull inflation

Answer 7

demand-pull inflation is a cause of inflation triggered by higher levels of demand in the economy, thus driving up the general price level

Question 8

definition of imported inflation

Answer 8

imported inflation is a cause of inflation triggered by higher import prices, forcing up costs of production and thus causing domestic inflation