Inflation, Disinflation, and Deflation

These flashcards cover key concepts related to inflation, disinflation, deflation, and their implications in economic policy.

Hyperinflation

Extremely high and typically accelerating inflation, often exceeding 50% per month.

Phillips Curve

A curve that illustrates the trade-off between inflation and unemployment in the short run.

Deflation

A decrease in the general price level of goods and services, or the opposite of inflation.

Seigniorage

Revenue generated by a government's right to print money.

NAIRU

Non-accelerating inflation rate of unemployment; the unemployment rate at which inflation does not change over time.

Disinflation

The process of reducing the rate of inflation.

Liquidity Trap

A situation in which monetary policy becomes ineffective because nominal interest rates are at or near zero.

Inflation Tax

The reduction in the real value of money held by the public caused by inflation.

Real Quantity of Money

The actual amount of money in circulation adjusted for the price level, calculated as M/P.

Output Gap

The difference between actual output and potential output, which can indicate economic performance.