Unit 7: Inflation

What’s in This Chapter? Inflation is an important factor influencing a nation’s economic health. No inflation and especially falling prices means more affordable products, which is especially important for lower...

Ways to Measure Inflation Common indices to measure inflation include the Consumer Price Index (CPI), the Producer Price Index (PPI), and the GDP Price Deflator. The Consumer Price Index (CPI) The most common measure of...

Money Demand and Supply In the long run, the value of money, like the price of any good or service, is determined by the demand and supply of money in circulation. The following example illustrates this concept. Problem:...

Long Run Consequences of Inflation In addition to higher consumer prices which especially harms lower income households, inflation has the following harmful macroeconomic consequences: 1. Higher interest rates. Inflation leads...

Effects of a Constant Money Supply  If no additional money is printed, the nominal value of spending in our economy remains constant (assuming no leakage of money to other countries and assuming a constant velocity (see Unit 9)...

Characteristics of a Gold Standard System A gold standard is a system in which a certain fixed amount of a country’s currency is legally exchangeable for gold. Because the ratio of gold to the money supply is fixed, the...

  Time limit: 0 Quiz-summary 0 of 10 questions completed Questions: 1 2 3 4 5 6 7 8 9 10 Information This is a ten question multiple-choice quiz covering the material in this Unit. I hope you do well! You have already...