A sustained general rise in prices across an economy Define "deflation" A sustained general fall in prices across an economy Define "disinflation" A fall in the rate of inflation Define 'hyperinflation' A situation where inflation levels are very high 2 causes of inflation 1. Demand-pull inflati...
A rise or fall in inflation does not mean a rise or fall in prices. Only affects the rate at which it rises/falls.A rise in inflation rate means a faster increase in prices, a fall in inflation rate means a lower increase in prices (if inflation rate is positive, goods still become ...
Why is the target not 0% or 5% 0%: may damp growth down too much- inflation figures are often over estimates. 5%: everyone will expect higher prices resulting in higher wage demand which will cause inflation to rise further Cost-push inflation when costs of production increase, so firms in...
A fall in the general level of prices Demand Pull inflation A persistent rise in the price level caused by increases in aggregate demand; AD=C+I+G+(X-M) e.g. decrease in income tax, decrease in interest rates. Disinflation A fall in the rate of inflation, prices are still rising but...