Macroeconomics - Inflation

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Economics

A-Level Economics

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5 Terms

1
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what is inflation?

increase in general price level of goods and services

2
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what are the causes of inflation?

  1. demand-pull inflation

  2. cost-push inflation

3
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what are the advantages of inflation?

  1. Higher wages for workers

  2. firms encouraged to increase output

  3. can keep unemployment low in a recession

  4. improvement of government finances

4
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what are the disadvantages of inflation?

  1. lower purchasing power

  2. lower export competitiveness

  3. fall in value of savings

5
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what is deflation

decrease in general price level