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Table of Contents

  1. Topic pack - Macroeconomics - introduction
  2. 2.1 The level of overall economic activity (notes)
  3. 2.1 The level of overall economic activity (questions)
  4. Section 2.2 Aggregate demand and supply (notes)
  5. Section 2.2 Aggregate demand and supply (simulations and activities)
  6. 2.2 Aggregate Demand and Aggregate Supply (questions)
  7. 2.3 Macroeconomic objectives (notes)
  8. Low Unemployment
    1. Low Unemployment
    2. What the data says
    3. The meaning of unemployment
    4. Case study - regional variation
    5. Consequences of unemployment
    6. Case study - tougher for men
    7. Types and causes of unemployment
    8. Disequilibrium unemployment
    9. Equilibrium unemployment
    10. Policies to reduce unemployment
    11. Low and stable inflation
    12. Low and stable inflation (notes)
    13. The meaning and measurement of inflation
    14. A consumer price index
    15. Finding out more about consumer price index weights
    16. Problems with measuring inflation
    17. Inflation - videos
    18. Consequences of inflation
    19. Hyperinflation
    20. The consequences of deflation
    21. Types and causes of inflation: demand-pull inflation
    22. Types and causes of inflation: cost-push inflation
    23. Case Study - car prices in Trinidad
    24. Possible relationships between unemployment and inflation
    25. PlotIT - Phillips curve
    26. Phillips curve - long-run
    27. Natural rate of unemployment
    28. NAIRU
    29. Economic growth
    30. Economic growth (notes)
    31. Causes of economic growth
    32. Economic growth and the PPF (1)
    33. Economic growth and the PPF (2)
    34. Economic growth and the business cycle
    35. Economic growth and the aggregate supply curve
    36. Consequences of economic growth
    37. Equity in the distribution of income
    38. Equity in the distribution of income (notes)
    39. Indicators of income equity
    40. Poverty
    41. The poverty line: An Indicator of Relative poverty
    42. The causes of poverty
    43. The role of taxation in promoting equity
    44. The role of taxation in promoting equity (notes)
    45. Other methods of promoting equity
  9. 2.3 Macroeconomic objectives (questions)
  10. 2.4 Fiscal policy (notes)
  11. 2.4 Fiscal policy (questions)
  12. 2.5 Monetary policy (notes)
  13. 2.5 Monetary Policy (questions)
  14. Section 2.6 Supply-side policies (notes)
  15. 2.6 Supply-side policies (questions)
  16. Print View

The meaning and measurement of inflation

Syllabus: The meaning of inflation, disinflation and deflation

Syllabus: Distinguish between inflation, disinflation and deflation.

Inflation

Inflation is a persistent and continuous increase in the general level of prices NB A one off increase in the general level of prices is not inflation.

Disinflation is not the same as deflation. Disinflation is when the inflation rate decreases. eg if prices are rising at 10% and then the rate of increase of prices falls to 8% (prices are still rising but by a decreased rate) this is disinflation.

Deflation is when the general level of prices are decreasing (falling)


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What the data says

Identify the main inflation measure in Brazil by accessing the World Bank Catalogue though this link.

  • Choose the World Development Data set
  • Click on Indicators
  • Type the term 'inflation' into the search engine.
  • Save the inflation data in a spreadsheet
  • plot the data over a 20 year period using a graph

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  1. Describe the data you have plotted focusing on short term patterns, long term trends, and relationships between variables.

Repeat the exercise for two other countries from different continents.

  1. Identify similarities and differences between the three sets of inflation data.
  2. Analyse the factors that might account for the similarities and differences you have identified. (You may want to revisit this answer once you have completed this section).
Also you can look at Brasilinforme distributed weekly to keep up to date

Essay Question

May 2008

2. (a) “The effect of a decrease in aggregate demand on output and the price level depends on the shape of the aggregate supply curve.” Explain this statement. [10 marks]

(b) Evaluate the likely effects of a falling rate of inflation on the performance of an economy. [15 marks]