MACE Ch2

Creeping inflation

• An increase in overall / general / average price level of g&s in an economy

• A drop in price level; the inflation rate is negative

• Inflation rate that exceeds 50% in a month

• This is achieved when the inflation rate records 2% or lower for the economy

• 3% inflation rate and below. Considered as mild inflation, good for economic growth

Disinflation

• A drop in Real GDP for 2 consecutive quarters of a year

• Simultaneous existence of inflation and recession at the same time

• This is achieved when the inflation rate records 2% or lower for the economy

• 3% inflation rate and below. Considered as mild inflation, good for economic growth

• A slowdown in inflation rate

Price stability

• Simultaneous existence of inflation and recession at the same time

• This is achieved when the inflation rate records 2% or lower for the economy

• An increase in overall / general / average price level of g&s in an economy

• A slowdown in inflation rate

• A drop in Real GDP for 2 consecutive quarters of a year

Hyperinflation 

• Inflation rate that exceeds 50% in a month

• A slowdown in inflation rate

• A drop in Real GDP for 2 consecutive quarters of a year

• 3% inflation rate and below. Considered as mild inflation, good for economic growth

• An increase in overall / general / average price level of g&s in an economy

Stagflation

• Simultaneous existence of inflation and recession at the same time

• A drop in Real GDP for 2 consecutive quarters of a year

• 3% inflation rate and below. Considered as mild inflation, good for economic growth

• This is achieved when the inflation rate records 2% or lower for the economy

• A drop in price level; the inflation rate is negative

Recession

• Inflation rate that exceeds 50% in a month

• An increase in overall / general / average price level of g&s in an economy

• A drop in Real GDP for 2 consecutive quarters of a year

• A drop in price level; the inflation rate is negative

• This is achieved when the inflation rate records 2% or lower for the economy

Inflation

• A drop in price level; the inflation rate is negative

• An increase in overall / general / average price level of g&s in an economy

• Inflation rate that exceeds 50% in a month

• A slowdown in inflation rate

• A drop in Real GDP for 2 consecutive quarters of a year

Deflation

• An increase in overall / general / average price level of g&s in an economy

• This is achieved when the inflation rate records 2% or lower for the economy

• Simultaneous existence of inflation and recession at the same time

• A slowdown in inflation rate

• A drop in price level; the inflation rate is negative

The index that can be used to measure the cost of living is _________.

• GDP deflator

• CPI

• PCE deflator

• Retail Price Index (RPI)

• Nominal GDP

Inflation rate is computed as a percentage of change in 

• price index

• Nominal GDP

• number of unemployed

• Real GDP

• GDP deflator