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