• Measuring the inflation rate, using consumer price index(CPI) data
• The limitations of the CPI in measuring inflation • Causes of inflation— demand-pull and cost-push • Costs of a high inflation rate—uncertainty, redistributive effects, effects on saving, damage to export competitiveness, impact on economic growth, inefficient resource allocation • Causes of deflation— changes in AD or SRAS • Disinflation and deflation • Costs of deflation— uncertainty, redistributive effects, deferred consumption, association with high levels of cyclical unemployment and bankruptcies, increase in the real value of debt, inefficient resource allocation, policy ineffectiveness • Diagrams: demand-pull inflation, cost-push inflation, deflation • Calculation: the inflation rate from a set of data using quantities purchased as weights in the CPI • Calculation (HL only): a weighted price index, using a set of data provided
Yes.... that is a 100,000,000,000,000 Zimbabwe dollar note! The product of extreme hyperinflation in Zimbabwe in the first decade of the 21st century. You can read about it here. By November 2008 the rate of inflation was a massive 89,700,000,000,000,000,000,000%!!!
Hungary has actually suffered a higher rate of inflation than that.... in July 1946 the rate of inflation was Jul. 1946, 41.9 quadrillion percent! See here for more details. Current inflation details for Hungary can be found here. This is a great infographic detailing these two cases and three others: https://commodity.com/blog/hyperinflation/ The US Inflation calculator can be found here... how much would it cost you in 2014 to buy something that was priced at $20 in the year you were born and what is the cumulative inflation rate? Venezuela is currently experiencing high levels of inflation http://www.bbc.com/capital/gallery/20180918-the-people-making-bags-out-of-worthless-money Link to packet Link to HL only supplement Deflation case study
Link to packet Link to chapter summary Link to Key differences between monetarist/new classical and Keynesian perspectives |