Inflation & Business Cycle

Front

General rise in price level, causing money to hold less value

Back

inflation

Front

Rapid increase in prices, inflation that is out of control

Back

hyperinflation

Front

A combined rise in prices with a slow down in the economy

Back

stagflation

Front

A system to measure inflation; measures the overall cost of goods & services bought by the typical urban consumer.

Back

consumer price index (CPI)

Front

Which cause of inflation best fits? A government agency decides to do an experiment and decides to drop cash from airplanes all across the country. Now there is a large amount of extra money flowing in the economy.

Back

Quantity Theory

Front

Which cause of inflation best fits? A drought causes orange groves in Florida to produce fewer and fewer oranges. Eventually orange juice is hard to purchase so the prices increase but demand still stays the same.

Back

Demand-Pull Theory

Front

Which cause of inflation best fits? The cost of cotton increases dramatically. A t-shirt manufacturer passes this increase cost of inputs on to the consumer.

Back

Cost-Push Theory

Front

You have a job where your pay is frequently adjusted to match inflation. Unanticipated inflation occurs and your pay goes up. Are you helped, hurt, or unaffected?

Back

Unaffected

Front

John's brother loans him $100 to get some groceries for the week. Unanticipated inflation occurs before John pays his brother back. Is John helped, hurt, or unaffected?

Back

Helped

Front

A bank loans money to an army vet to purchase a truck. Inflation increases unexpectedly. Is the bank helped, hurt, or unaffected?

Back

Hurt