Chapter 7: Inflation and the Measurement of Prices

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11 Terms

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Inflation
________ is the rise in the general level of prices in an economy.
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Price indices
________ can be used to translate nominal values to real values that allow us to compare the purchasing power of money over time by adjusting for inflation.
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Disinflation
________ is a period of positive but falling inflation.
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Deflation
________ indicates a period of declining prices of goods and services.
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barter system
In a(n) ________, each good or service must be compared against all other goods or services for which it could trade.
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inflation rate
The ________ between two time periods is simply the percentage change in the price index between the periods.
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Demand
________ pull inflation arises from increases in aggregate demand.
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Real values
Real values are values that have been adjusted for inflation.

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Nominal value


Nominal value are values that have not been adjusted tor inflation.
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Demand pull inflation
Demand pull inflation arises from increases in aggregate demand.

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Cost push inflation


Cost push inflation arises from decreases in aggregate supply