inflation

aggregate demand

total spending on all goods and services in the economy

aggregate demand equation

C + I + G + (X-M)

aggregate supply

the production of goods and services

borrowers - households

better off in periods of inflation as real value of their debt will decrease and value of physical assets will increase

savers - households

worse off in periods of inflation as purchasing power of saved money will decrease due to a sustained increase in general price level

borrowers - firms

better off in periods of inflation as real value of their debt will decrease, value of physical assets will increase relative to debt incurred from purchasing it

firms that import

lower inflation rate will be better off as G+S will be more price competitive

inflation

a persistant increase in the general price level of a nation

deflation

a persistant decrease in the general price level of a nation

disinflation

fall in the rate of inflation

recession

2 back to back quarters of negative GDP growth

CPI

consumer price index - G+S, rent, petrol

quantity theory of money equation

MV=PQ

MV=PQ stands for

money supply, velocity of circulation, price level, real output

money supply is

amount of money in the economy at one time

velocity of circulation

how much a single dollar is used in transactions in a country per year

price level

inflation rate

real output

economic growth rate

aggregate supply is

costs of production, anything impacting a business

demand pull inflation

total demand for G+S in the economy grows faster than the economy’s ability to produce them

cost push inflation

when overall prices increase because the cost of producing G+S goes up