PPT-Inflation An increase in the economy’s price level

The price level is the weighted average of prices A decrease in moneys purchasing power When the supply of money is growing faster than the production of goods and services Inflationwhat is it. Week . 20. Shane Murphy. s.murphy5@lancaster.ac.uk. Office Hours: Monday 3:00-4:00 – LUMS C85. Outline. Roll Call. Problems. Chapter . 33: . Problem . 3. The economy is in a recession with high unemployment and low output.. compare dollar figures from different points in time.. Need Price Levels (CPI) for two different points in time . Inflate . Babe Ruth’s 1931 . salary . into . 1999 dollars. . . .  . Value . in Year 1 . WRESTLERS . & . BASKETBALL PLAYERS!!. GO PANTHERS!!!!. INFLATION. Chapter 11, Section 2. You may have heard relatives talk about the good old days when a dollar would buy something. What happened to that dollar? Why won’t it buy as much as it did last month or last year? . Sample Questions. AP Economics. Mr. Bordelon. My cat Emma loves you all, and is watching you work hard.. Suppose GDP is $8,000, autonomous consumption is $500, and planned investment spending is $200. The marginal propensity to consume is 0.8.. Price Level & Real Income. As long as wages rise with price levels, inflation doesn’t cause harm standard of living. Real . Wage = . Wage . rate .  100. Price index. Real . Income = . Income . Chapter 13. Section 1. National Income Accounting. National Income Accounting. National Income Accounting. : the measurement of the national economy’s performance. Five major statistics measure the national economy: . I recommend that you view it as one page by clicking on the open book icon at the bottom of the page.. 9b – Inflation. TOPICS. Definition of . Inflation?. What is . a Price Index. ?. Calculate the Inflation Rate using an Index. What will happen to the Price level from the quantity theory of money if M increases and all other factors remain the same.. What will happen to the Price level if velocity increases?. What would cause velocity to increase?. Describe the economic impact of inflation on business 1.06 Understand economic indicators to recognize economic trends and conditions INFLATION A persistent increase in the average price level in the economy. What is inflation?. Define inflation. How does it affect the economy?. a rise in the general price level. . It causes rising prices for goods and services. . It reduces purchasing power for individuals. . Does Paper Money have any intrinsic value?. What is money then?. Why is it important?. If there was no money then we would have to barter. For barter to work – trade is said to require the . double of coincidence of wants. . . Inflation is a situation in which the general price level rises or the value of money falls.. Types of Inflation:. On the basis of the rate of increase in price level we have three types of inflation,. MEANING OF INFLATION.  .  Inflation is commonly understood as a situation of substantial, and general increase in the level of prices of goods and services in an economy and a consequent fall in the value of money over a period of time. . Paper: Introductory Macroeconomics. Unit: 4. Prepared by. Anindita. . Chakravarty. There are two main causes of . inflation. . Both . are responsible for a . general rise in prices . in an . economy.