Understanding Inflation

accounting

<p>Panics are characterized by affordable prices, while recessions are not (C)</p> Signup and view all the answers

<p>A typical measure of how many goods/services currency can be exchanged for (A)</p> Signup and view all the answers

<p>Deflation and inflation are basically the same (B)</p> Signup and view all the answers

The decrease in value of currency, leading to higher prices.

Institutions that manage a country's economy and control money supply.

The official process of creating and releasing new currency.

The amount of goods/services currency can buy.

The increase in value of currency, leading to lower prices and less money in circulation.

A sudden loss of confidence in the economy, leading to decreased spending.

A prolonged period of economic decline marked by falling GDP.

The flow of money within an economy.

A framework for assessing the worth of items based on rarity.

As more money is created, individual currency values drop, causing prices to rise.

Central banks adjust currency flow to stabilize economies and prevent downturns.

As inflation rises, the real value of wages decreases, impacting purchasing power.

The theory that links the money supply to price levels in an economy.

Money can lose value as it's overproduced in circulation, impacting savings.

Signs such as decreased production and increased unemployment during recessions.

Consumers tend to spend less as prices rise, adjusting their purchasing decisions.

Nominal value is what you see, real value adjusts for inflation.

Increasing money supply can distort supply and demand equilibrium, affecting prices.

Regulatory measures by banks to manage currency and influence inflation.

Extreme inflation that leads to a rapid decrease in currency value.

Central banks aim to ensure stable prices and economic conditions.

Actions by central banks to control the money supply and achieve economic objectives.

Higher interest rates can help control inflation by reducing spending.

Controlled money supply supports sustainable economic growth.

Bartering involves direct exchange of goods, while currency simplifies transactions.

Can help offset inflation by increasing the quantity of goods produced with the same money.

Central banks engage in forecasting to manage money supply sustainably.