AQA A Level Economics: Inflation and Price Level Flashcard

Front

What is inflation?

Back

A sustained increase in the average price level of goods/services in an economy.

Front

What is demand pull inflation caused by?

Back

Excess demand in the economy

Front

Which of the following is a component of Aggregate Demand (AD)?
Options: Interest Rates (IR), Savings (S), Consumption (C), Taxation (T)

Back

Consumption (C)

Front

What does the 'V' represent in Fisher's equation of exchange MV = PQ?

Back

Velocity of money

Front

What is the consequence of inflation for consumers?

Back

Decrease in purchasing power

Front

What is the term for inflation caused by increased production costs?

Back

Cost push inflation

Front

What is the impact of inflation on firms?

Back

Creates uncertainty and delays investment

Front

What is the term for a fall in the average price level of goods/services?

Back

Deflation

Front

What does 'adaptive expectations' assume?

Back

Individuals base their expectations on past observations

Front

What is a potential trade-off when tackling inflation?

Back

Increased unemployment