1711210
Beschreibung
Mindmap von juliasutton, aktualisiert more than 1 year ago
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Erstellt von juliasutton
vor etwa 11 Jahre
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Inflation
- The rise in the general level of prices,
sustained overtime
- HyperInflcation
- Zimbabwe
- 2008
- inflation reached 150 000%
- 2008
- where costs of inflation are felt most
- Zimbabwe
- Demand Pull
- Factor that
causes inflation
- too much many chasing too
few goods
- increase in aggregate demand
- e.g. larger population demands more food, there is not enough so prices go up
- increase in aggregate demand
- Triggered by consumers
- Factor that
causes inflation
- Cost Push
- when it becomes
too expensive for
firms to supply
their goods and
services
- can be caued
by an increase
in price of raw
materials
- can be caued
by an increase
in price of raw
materials
- Factor that causes
inflation
- Triggered by suppliers
- when it becomes
too expensive for
firms to supply
their goods and
services
- Deflation
- Decreasing nominal
prices for goods and
services
- Decreasing nominal
prices for goods and
services
- CPI
- Consumer Price Index
- measure of general
level of prices in the
UK
- changes in CPI measure inflation
- index number
- shown as a percentage
relative to the base year,
value of 100
- 1996
- shown as a percentage
relative to the base year,
value of 100
- 'basket of goods'
- 650 goods and services
- prices are collected monthly
- from 7,000
households
- and compared
with that of a year
ago
- from 7,000
households
- goods are weighted
- weights show the proportion
of income spent on each
item
- reflects spending habits of UK
- reflects spending habits of UK
- weights show the proportion
of income spent on each
item
- updated regularly to
reflect spending habits of
UK
- if demand for a
product goes up or
down the survey will
pick it up
- either being included or excluded from the basket
- either being included or excluded from the basket
- e.g. in 2013
- champagne
re[laced by white
rum
- champagne
re[laced by white
rum
- due to technology updates
- e.g new phones
- e.g new phones
- if demand for a
product goes up or
down the survey will
pick it up
- 650 goods and services
- doesn't include mortgages or rents
- sceptical?
- 7,000 households not enough to
represent whole population
- doesn't include top and bottom 4% of earners
- doesn't include pensioners
- Doesn't reflect unusual spending habits
- 7,000 households not enough to
represent whole population
- Consumer Price Index
- RPI
- alternative measure of inflation
- older
- older
- retail price index
- a measure of the average prices in the UK
- Includes housing costs
- alternative measure of inflation
- Interest rates
- raised in a
measure to
reduce rate of
inflation
- if they are cut, it is a sign
that inflation is not a threat
- cost of borrowing
- rewards of
saving
- raised in a
measure to
reduce rate of
inflation
- UK inflation
- Target of 2%
- achievement of this
target is down to
Monetary Policy
Commitee
- meet monthly and set base rate of interest rate
- they fail if inflation is
- above 3%
- below 1%
- above 3%
- meet monthly and set base rate of interest rate
- for stability
and control
- protects savers
- competitive
- protects trade
- achievement of this
target is down to
Monetary Policy
Commitee
- Target of 2%
- Impacts
- prices are forced up rapidly
- but wages are not
- but wages are not
- people can't
afford as much
- decreased trade
- countries don't want to trade if
your currency is worthless
- countries don't want to trade if
your currency is worthless
- benefits those in debt
- becomes worthless
- becomes worthless
- bad for savers
- become worthless
- become worthless
- prices are forced up rapidly
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