Price Stability 1

A persistent rise in the price level within an economy over a period of time

• Inflation

• Price level

• Deflation

• Rate of Inflation

Refers to a condition of low stable inflation

• Inflation

• Price stability

• Price Level

• Deflation

The average price of goods and services in an economy

• Price stability

• Inflation

• Deflation

• Price level

When the price level in an economy falls over a period of time.

• Inflation

• Deflation

• Price level

• Price Stabillity

The negative effects of deflation

• Unemployment

• Increasing Tax

• Fiscal drag

• Inflationary noise

Which One is the effect of demand pull inflation?

• Strong Exchange rate

• Increase government spending

• AS shift to the left

• Increase interest rate

Which One is the effect of Cost push inflation

• reduce raw material prices

• SRAS shift to the left

• Decrease prices of imported raw materials

• Decrease wages

Which One is the potential benefit of inflation?

• Stimulates Output

• Burden of Debt

• Increase the real rate of interest

• Deflationary Spiral

Cost Push Inflation is caused by three different factors, EXCEPT :

• Monopolies can raise prices due to the lack of competition

• Increase in the price level due to an increase in AD

• Where trade unions are powerful they can push up wages in excess of production gains

• The rise in the cost of raw materials forcing up the costs of production

The rate at which the price level rises over a period of time

• Deflation

• Inflation

• Rate of inflation

• Hyper inflation