a) Inflation

a) Understanding of: inflation, deflation, disinflation

e) causes of inflation: demand pull, cost push, growth of the money supply

f) the effects of inflation on consumers, firms, the government, and workers

inflation = a sustained rise in the average price level of goods and services

deflation = a fall in the average price level of goods and services

disinflation = a fall in the rate of inflation

inflation types

• demand-pull inflation

• graph

• cost-push inflation

• graph

inflation is caused by

• changes to the money supply

  • increase in the amount of money in circulation

  • increase in AD

  • demand-pull inflation

• changes in real wages

  • increase in real wages

  • increase in the cost of production

  • decrease in SRAS

  • cost-push inflation