CHAPTER 12 3.0 / 5 based on 1 rating ? EconomicsA2/A-levelAQA Created by: hayley ashtonCreated on: 26-02-13 18:29 Deflation? A fall in the general price level 1 of 16 CPI? Consumer Price Index- Headline measure of inflation, derived from movements in a weighted basket of consumer goods over a 12 month period 2 of 16 Family Expenditure Survey? Representative monthly survey of UK household expenditure used to derive changes in the consumer price index 3 of 16 Indirect Taxes? Taxes levied on spending on goods and services 4 of 16 Wage-price Spiral? Process whereby increases in costs like wages lead to increases in prices, which in turn leads to firms' costs increasing, and so on 5 of 16 Quantity Theory of Money? Theory that increases in the money supply will lead to increases in the price level 6 of 16 Fisher Equation? MV=PT. M=Money Supply, V=Velocity of circulation of money, P=Price Level and T=Number of Transactions per year 7 of 16 Velocity of Circulation? Number of times the money supply changes hands in a year 8 of 16 Hyperinflation? Very large, rapid increases in the general price level 9 of 16 Anticipated Inflation? Where economic agents correctly predict the future rate of inflation 10 of 16 Unanticipated Inflation? Where economic agents do not accurately predict the future rate of inflation 11 of 16 Shoe-leather Costs? Time and money spent 'shopping around' by consumers to find the best deals when prices are rising in the economy 12 of 16 Fiscal Drag? Increases in the burden of taxation when tax allowances aren't increased in like with inflation 13 of 16 Money Illusion? When economic agents fail to realise that changes in money values aren't the same as changes in real values 14 of 16 Benign Deflation? Falling prices resulting from technological advances across the economy 15 of 16 Malevolent Deflation? Falling prices resulting from a significant downturn in economic activity 16 of 16
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