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Inflation

Description

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Dani  Videa
Mind Map by Dani Videa, updated more than 1 year ago
Dani  Videa
Created by Dani Videa over 6 years ago
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Resource summary

Inflation
  1. General rise in prices in the economy
    1. For example when sometimes products like food are too expensive
      1. It's given by percents
        1. It isn't always bad
          1. But after a 5% rise business should prepare
      2. Causes
        1. Demand pull- inflation
          1. Too much people want to buy
            1. But companies don't have the capacity
              1. Prices increase
          2. Cost-push -inflation
            1. When companies spend too much on production
              1. They have to rise their prices to keep profit margins
              2. Wage-price spirals and expectations
            2. Effects on businesses
              1. Increased costs
                1. Uncertainty
                  1. Consumer reactions
                    1. International competitivness
              2. Deflation
                1. Effects
                  1. Reducing costs
                    1. Stagnant economy
                  2. How is it measured
                    1. 1) Representative products are put together as a "market basket"
                      1. 2)The price of this total basket is compred over time
                        1. 3) This result in an index % of the amount the prices have changed
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