Price Stability
- Created by: martin cornelius
- Created on: 13-01-19 15:52
View mindmap
- Price Stability
- Inflation
- A rise in general price levels
- Hyper Inflation
- Inflation rising too quickly and uncontrollably, money practically worthless
- Causes
- Demand Pull
- aggregate demand risesat/nearing full employment, cannot satisfy increased demand (all resources employed, cannot increase productivity)
- hence prices go up due to scarcityso workers demand higher wages so they can pay for stuff and demand increases (repeat)
- Cost Push
- rising costs of productionfirms increase prices to keep profits uphence prices go up
- Monetarism
- banks increase amount lent outpeople have more to spend hence aggregate demand increases
- however at full employment, maximum productivity already reached cannot spend extra money as no goods to spend it on goods are scarce, hence prices go up
- Demand Pull
- Deflation
- A decrease in general price levels
- Causes
- Market supply increased relative to demand
- Competion Increased
- Labour Productivity Rises
- Government Policies
- Fiscal
- Govt spending & taxation to manipulate AD
- Monetary
- Interest rates to manipulate AD
- Fiscal
- A state of economy with steady prices of goods and services
- Low and steady inflation
- Steady unemployment
- Steady economic growith
- Inflation
Similar Economics resources:
Teacher recommended
Comments
No comments have yet been made