Inflation

Question 1

Inflation

Answer 1

Inflation means a continuous, persistent and sustained increase in the general levels of prices of consumer goods over time

Question 2

Consumer Price Index

Answer 2

CPI is an index that measures the prices of a fixed market basket of goods and services that is bought by a typical consumer.

Question 3

CPI Base year set by Statistics Canada

Answer 3

2002

Question 4

CPI formula

Answer 4

Question 5

Rate of Inflation

Answer 5

Question 6

2 Types of inflation

Answer 6

1. Demand-Pull Inflation
2. Cost-Push Inflation

Question 7

Demand-Pull inflation

Answer 7

A result of spending increasing faster than production.
”too much spending chasing too few goods”

Question 8

Cost-Push Inflation

Answer 8

Occurs as prices rise because of a rise in per-unit production costs.
Unit cost = total input costs/ units of output

Question 9

In Cost-Push inflation ____ rise but ___ falls

Answer 9

In Cost-Push inflation prices rise but output falls

Question 10

Cost-Push inflation

Answer 10

• Reduces real output
• Redistributes a decreased level of income

Question 11

Demand-Pull Inflation

Answer 11

• One view is that zero inflation is best
• Another view is that mild inflation is best