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Macroeconomics: Inflation

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Termini in questo insieme (20)

  • What is inflation?

    Inflation is the general increase in prices of goods and services over time, reducing the purchasing power of money.

  • How is inflation measured?

    Inflation is commonly measured by the Consumer Price Index (CPI) or the Producer Price Index (PPI), which track price changes of a basket of goods and services.

  • What causes demand-pull inflation?

    Demand-pull inflation occurs when aggregate demand exceeds aggregate supply, pushing prices up.

  • What is cost-push inflation?

    Cost-push inflation happens when rising production costs, like wages or raw materials, increase overall prices.

  • What is hyperinflation?

    Hyperinflation is an extremely rapid and out-of-control rise in prices, often exceeding 50% per month.

  • How does inflation affect purchasing power?

    Inflation decreases purchasing power, meaning each unit of currency buys fewer goods and services over time.

  • What is the difference between nominal and real values?

    Nominal values are measured in current prices, while real values are adjusted for inflation to reflect true purchasing power.

  • What is the inflation rate formula?

    The inflation rate is calculated as \(\frac{P_t - P_{t-1}}{P_{t-1}} \times 100\%\), where P is the price level.

  • What is the Phillips Curve?

    The Phillips Curve shows an inverse relationship between inflation and unemployment in the short run.

  • What is the role of expectations in inflation?

    Inflation expectations can influence wage demands and price setting, potentially making inflation self-fulfilling.

  • How does inflation impact savers and borrowers?

    Inflation hurts savers by eroding the value of saved money but helps borrowers by reducing the real value of debt.

  • What is the difference between headline and core inflation?

    Headline inflation includes all items, while core inflation excludes volatile food and energy prices.

  • What is deflation?

    Deflation is a decrease in the general price level, the opposite of inflation.

  • What are the social costs of inflation?

    Inflation can cause uncertainty, reduce savings, distort price signals, and redistribute income unfairly.

  • How can central banks control inflation?

    Central banks use monetary policy, such as adjusting interest rates, to control inflation.

  • What is the quantity theory of money?

    The theory states that MV = PY, linking money supply (M), velocity (V), price level (P), and output (Y).

  • What is stagflation?

    Stagflation is a situation with high inflation and high unemployment simultaneously.

  • How does inflation affect international competitiveness?

    Higher inflation can make exports more expensive, reducing a country's international competitiveness.

  • What is the difference between anticipated and unanticipated inflation?

    Anticipated inflation is expected and can be planned for; unanticipated inflation causes unexpected losses or gains.

  • What is the Fisher effect?

    The Fisher effect describes how nominal interest rates adjust to expected inflation to keep real rates stable.