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Price Stability - Coggle Diagram
Price Stability
Consequences
producers
-Increased in production costs -menu costs -labour market disputes -
Savers
-reduces purchasing power -reduces the impact of any interest
Government
-inflation leads to pressure on government -some tax revenue may increase
Causes of inflation
rise in costs
-rise in costs of production -fall in exchange rate -fall in productivity
Too much demand
-Increased incomes -total demand rises faster than total supply
Definition
When the general price level either stays the same or rises at a low rate over time
Inflation definition
A sustained increase in the general price level
real definition
Value of an economic variable that takes account of changes in the general price level over time
CPI (consumer price index)
Measure of general price level used to calculate inflation rate.
original price/100 * inflation rate