Inflation Flashcards
1
Q
What is inflation?
A
The continuous rise in general terms
2
Q
What are the three aspects of inflation definition that must be emphasised?
A
Continuous price
Considerable increase in price
It refers to an increase in prices in general
3
Q
How do we measure inflation?
A
By using CPI, (consumer price index.)
Used to measure the average cost of an average shopping basket of goods
4
Q
What are the consequences of inflation?
A
High inflation may lead to higher borrowing costs
Standard of living may decrease if salaries don’t keep up with inflation
5
Q
What are some cause of inflation?
A
Unemployment Increase in salary and wages Importing of goods Crime Natural disasters
