Economics Unit 4 - Inflation and Deflation

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What is inflation?
A sustained increase in the general price level
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What is deflation?
A fall in the general price level
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What are the 2 causes of inflation?
Cost-push and Demand-pull
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What are 4 consequences of inflation?
Higher cost of living, Reduced competition, Increased interest rates, Discourages investment
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What are the 2 methods the measure inflation?
CPI and RPI
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Does the CPI include house prices?
No, RPI does
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What are the limitations of measuring inflation?
Over estimates inflation, Doesn't consider the whole economy
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What is Fisher's equation?
MV = PT
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What 2 components of Fisher's equation are constant?
V and T
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Other cards in this set

Card 2

Front

What is deflation?

Back

A fall in the general price level

Card 3

Front

What are the 2 causes of inflation?

Back

Preview of the front of card 3

Card 4

Front

What are 4 consequences of inflation?

Back

Preview of the front of card 4

Card 5

Front

What are the 2 methods the measure inflation?

Back

Preview of the front of card 5
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