week 8 Flashcards
(13 cards)
is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
Inflation
Types of Inflation
Occurs when demand for goods and services exceeds their supply.
Demand-Pull Inflation
Types of Inflation
Occurs when the costs of production increase, leading to a decrease in the supply of goods and services
Cost-Push Inflation
Types of Inflation
Occurs when workers demand higher wages, leading to increased production costs and higher prices.
Built-in Inflation
is the decrease in the general price level of goods and services, increasing the purchasing power of money.
DEFLATION
Types of Deflation
Occurs when there is a decrease in the overall demand for goods and services.
Demand-Side Deflation
Types of Deflation
Occurs when there is an increase in the supply of goods and services, leading to lower prices.
Supply-Side Deflation
Social Costs of Inflation:
- Decreased purchasing power
- Uncertainty in the economy
- Menu costs
- Shoe leather costs
Social Costs of Deflation:
- Increased real value of debt
- Delayed consumption
- Reduced investment
- Increased unemployment
affects inflation and deflation by influencing the cost of imports and exports.
exchange rate
Government Policies to Manage Inflation and Deflation
- Monetary Policy
- Fiscal Policy
- Price Controls
- Subsidies
- Trade Policies
Role of Bangko Sentral ng Pilipinas (BSP)
- Inflation Targeting
- Interest Rate Adjustments
- Open Market Operations
- Reserve Requirements
- Financial Stability
Tips for Consumers to Cope with Inflation
- Budgeting
- Saving
- Investing
- Reducing Debt
- Seeking Financial Advice
