2. o Inflation- a persistent rise in the general level of
prices related to an increase in the volume of
money and resulting in the loss of values of
currency.
3. o Stagflation- a condition of slow economic
growth, and relatively high unemployment
accompanied by inflation.
o Cost push inflation- causes the equilibrium
price to rise and the aggregate output to
decline.
o Demand pull inflation- in which rising demand
results in a rise in prices.
o Hyperinflation- extreme or excessive inflation.
4. o Inflation is caused by four factors.
o 1) the supply of money goes up.
o 2) the supply of other goods goes down.
o 3) demand for money goes down.
o 4) demands for other goods goes up.
5. o 1) hoarding
o 2) rising prices of imports
o 3) lowers national saving
o 4) illusions of making prophets
o 5) increased risk
6. 1) it can benefit the inflators
2) it can benefit the cartels
7. Deflation- a fall in the general
price level or a contraction of credit and
available money.