Inflation and Unemployment Flashcards

Flashcards about Inflation & Unemployment

Inflation

The rate of increase in prices over a given period of time.

Consumer Price Index (CPI)

An index of the prices of a representative "shopping basket" of consumer goods and services of an average South African household. Used to track inflation and deflation.

Producer Price Index (PPI)

Measures the average change over time in selling prices received by domestic producers of goods and services. Measures price change from the perspective of the seller.

GDP Price Deflator

Measures the changes in prices for all of the goods and services produced in an economy.

Demand-Pull Inflation

Prices pulled up by an increase in aggregate demand.

Cost-Push Inflation

Prices pushed up by an increase in costs of production.

Inflation targeting

The setting of a target for inflation by government (with central bank) for price stability objective

Phillips Curve

A curve that demonstrates the inverse relationship between inflation and unemployment: When inflation increases, unemployment falls, and vice versa.

Stagflation

A period of economic stagnation (characterized by low economic growth and high unemployment) and high inflation.

Unemployment

The state of not having work (employment).

Frictional Unemployment

Unemployment that is unavoidable but not considered a serious problem.

Seasonal unemployment

Unemployment that occurs during specific seasons.

Cyclical Unemployment

Unemployment caused by a decline in aggregate demand.

Structural Unemployment

Unemployment due to mismatches between the skills of workers and the requirements of employers.