Chapter 26 Econ info

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.

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

Inflation caused by aggregate demand rising faster than output and supply

A situation where inflation and unemployment are high and/or rising together

Measure of the general price level, includes a way of expressing the changes in the prices of a number of different products

Rate at which of prices rise, a general and continuing rise in prices

A period where the level of demand is g general and sustained fall in the general level of prices in the economy

Runaway inflation during which prices rise at a phenomenal rate and money becomes almost worthless

A person’s income in terms of what it can buy

Total demand in the economy including consumption, investment, government expenditure and exports minus imports

Price paid to lenders for borrowed money.  It is the cost of borrowing

Economists who believe there is a strong link between growth

Amount goods and services

Costs to firms of having to make repeated price changes

Costs to firms and consumers of searching for new suppliers when inflation is high