Chapter 26 Econ info

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Draggable item		Corresponding Item
Stagflation		Price rises are followed by demands for higher wages which in turn cause costs to rise making workers demand more rises to compensate them for rising cost of living and so on.
Purchasing power of money		Inflation caused by a rise in business costs e.g. production costs which firms pass on to consumers so as not to reduce their profits
Cost-push inflation		Inflation caused by aggregate demand rising faster than output and supply
Real income		A situation where inflation and unemployment are high and/or rising together
Interest rates		Measure of the general price level, includes a way of expressing the changes in the prices of a number of different products
Wage-price spiral		Rate at which of prices rise, a general and continuing rise in prices
Consumer Price Index		A period where the level of demand is g general and sustained fall in the general level of prices in the economy
Demand-pull inflation		Runaway inflation during which prices rise at a phenomenal rate and money becomes almost worthless
Menu costs		A person’s income in terms of what it can buy
Shoe leather costs		Total demand in the economy including consumption, investment, government expenditure and exports minus imports
Deflation		Price paid to lenders for borrowed money. It is the cost of borrowing
Monetarists		Economists who believe there is a strong link between growth
Aggregate demand		Amount goods and services
Hyperinflation		Costs to firms of having to make repeated price changes
Inflation		Costs to firms and consumers of searching for new suppliers when inflation is high