ch 12

a 10% inflation rate means that goods and services are ___________ expensive than they were a year ago

10% more

over the past 10 years, U.S. inflation have averaged about _____

2%

only when _____ inflation equals ________ inflation, there will be no redistribution of wealth

actual, expected

a widely expected change in the price level

anticipated inflation

anything beyond a mild substained rate of inflation is generally ____ for an economy

bad

a country's ____________ regulates the supply of money

central bank

real prices are used to ________ prices of goods over time

compare

inflation results in less reliable prices, which confuses _________ and ___________

consumers, producers

producer price index exists for different industries and are used to calculate changes in ____________

costs of inputs

unanticipated inflation causes significant __________ in the economy

disruptions

money under the bed is precisely what inflation does tax because as prices rise, the value of that money ____

falls

the U.S. central bank is the

federal reserve

inflation occurs when the general cost of living ________

increases

an increase in the general level of prices

inflation

the % increase in the average level of prices over a period of time

inflation rate

inflation can also transfer wealth from borrowers to lenders when borrowers enter into contracts expecting high rates of ________ and the actual inflationrate is much lower. We call this _____________

inflation, disinflation

high and variable inflation reduces _____

investment

bc inflation reduces the real returns lenders receive on their loans, it transfers wealth from the ____________ to the ______________

lender, borrower

inflation redistributes wealth to __________ and ______________

lenders, borrowers

distorted prices are a ____ reliable signal of scarcity

less

when price signals are difficult to interpret, the market economy does not work as well and resources are allocated ____________ than otherwise

less efficiently

the feds use ____________ and _________ to control inflation and minimize recessions

monetary policy, money supply

inflation comes from a sustained increase in the what

monetary supply

Real Rate + Inflation Rate

nominal rate

real interest rate + inflation rate =

nominal rate

when prices rise and wages do not, people are effectively _______

poorer

with high/variable inflation, people will spend more money/time trying to predict and cope with the _________________

price changes

inflation is measured by changes in the __________

price index

we measure the general level of prices with a ________

price index

inflation distorts the information delivered by what

prices

what measures the average price received by producers?

producer price indexes (PPI)

nominal rate - inflation rate =

real interest rate

a price that has been adjusted for inflation

real price

inflation transfers ___________- from citizens to the government- thus, inflation is a type of _____ that no one can avoid

real resources, tax

high and valuable inflation results in less productive use of ________

resources

without an increase in the supply of goods, prices will _____

rise

decision-makers generally are able to anticipate _____ and _____ rates of inflation

slow, steady

an increase in the price level that comes as a surprise, atleast for mos decision-makers

unanticipated inflation

inflation also redistributes what

wealth