DEFINITIONS Flashcards
(11 cards)
What is inflation?
The general and sustained increase in the level of prices of goods and services which reduces the purchasing power of money
What is deflation?
The persistent fall in prices in an economy in a year (inflation is negative)
What is disinflation?
When the rate of inflation falls
(prices rising at slower rate)
What is hyperinflation?
When prices are increasing at an unsustainable rate
What is stagflation?
When there is high unemployment and high inflation
What is cyclical unemployment?
Unemployment caused by a lack of demand in the economy (e.g a recession)
What is structural unemployment?
Unemployment caused by an industrial organisation of the economy
What is Real wage unemployment?
Unemployment when wages are set too high, above the equilibrium
What is seasonal unemployment?
Unemployment caused by a decrease in demand due to the season, e.g fruit pickers
What is frictional unemployment?
Unemployment caused by individuals moving between jobs
What is the price level?
Average of the current prices of goods and services in an exonomy
