econ inflation vocab

Inflation

A sustained increase in the general or average level of prices and a fall in the value of money.

Deflation

A persistent fall in the average level of prices in an economy.

Disinflation

A fall in the rate of inflation.

Consumer Confidence

An economic indicator that measures the degree of optimism that consumers feel about the state of the economy and their own personal financial situation.

Consumer Price Index (CPI)

A measure of the average rate of inflation which calculates the change in the price of a representative basket of goods and services purchased by the "average" consumer.

Produce Price Index (PPI)

A measurement of the average change over time in the selling prices received by domestic producers for their output.

Weighted Price Index

An approach to calculating the change in the price level by giving a weight to each item according to its importance in the consumers' budgets.

Demand-Pull Inflation

Inflation that is caused by increasing aggregate demand in an economy, i.e. a shift of the AD curve to the right.

Cost-Pull Inflation

Inflation that is caused by an increase in the costs of production in an economy, i.e. a shift of the SRAS curve to the left.

Stagflation

Stagflation refers to a state of the economy when it experiences both high unemployment and high inflation. This is caused by a fall in short-run aggregate supply.

Hyperinflation

Price level rises that are more than 50% a month can be considered hyperinflation.