How do economists define inflation? - A general, across-the-board increase in prices throughout the
economy, to the point that it affects almost all people
Define hyperinflation and give a historic example. - A huge and rapid increase in the cost of living, such
as what people in Germany experienced in the early 1920s.
What two factors were the main causes of increased government expenditures in the 1960s? - The
federal government dramatically expanded social programs such as Medicare, Medicaid, and welfare
and it spent huge sums on the war in Vietnam.
How did the federal government pay for those? - The government borrowed money to cover some of
the debt, but it also simply printed more money to pay for the increased spending.
What two factors caused stagflation in the early 1970s? - Significant inflation along with rising
unemployment
What is deflation? - An overall decline in prices
What causes demand-pull inflation? - An increase in aggregate demand that is not accompanied by an
increase in aggregate supply
What is cost-push inflation? - A decrease in aggregate supply which leads to a decrease in productivity, a
decrease in supply, and a resulting increase in prices for scarce resources
When does a wage-price spiral occur? - When producers and consumers both try to protect themselves
from the effects of expected inflation
What is purchasing power? - The ability of individual consumers to buy goods and services, at least in
the short run
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller VasilyKichigin. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.49. You're not tied to anything after your purchase.
