Inflation and Government Economic Policies

1147 Words Aug 15th, 2013 5 Pages
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Inflation and Government Economic Policies | M3:A2 | 5/1/2013 | |

ECO 201
M3:A2
5/1/13

1. What is inflation? Inflation is an increase in prices for goods and services (What is Inflation?).
What are the causes of inflation? Inflation has a variety of possible causes, but they are between the Keynesian and monetarist theories, ranging between demand-pull, cost-push, built-in inflation, and the quantity model. With demand-pull, inflation is caused by aggregate demand being more than supply. With cost-push, inflation is caused when manufacturers and businesses raise prices due to shortages in order to balance increases in production costs. With built-in inflation, inflation occurs due to prior increases in prices
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Consumer Price Index for All Urban Consumers (CPI-U): U.S. city average, by expenditure category, 2013).

(Consumer Price Index-All Urban Consumers). 3. What is the Producer Price Index (PPI)? Producer Price Index (PPI) is an economic index that keeps track of the cost of production or wholesale prices for certain goods and services (What Is a Producer Price Index?).
How has the PPI behaved since the year 2000? The PPI behavior has decreased since the year 2000.
What have been the causes of these changes? In your response, include a graph of the PPI for this period and cite your source. The causes of these changes are due to a decline in finished goods such as finished energy. Finished energy has fell 3.4 percent in March, marking it the largest decline since 2010 with a 3.5 percent decrease. There was also a 6.8 percent decline in gasoline due lower prices for diesel fuel and home heating oil (Short, 2013).

(Short, 2013). 4. What is the Consumer Expenditure Survey (CE)? Consumer Expenditure Survey (CE) is a survey that provides information on the buying and spending habits of consumers in an economy (What Is Consumer Expenditure?).
How has the Survey behaved since the year 2000? The Consumer Expenditure Survey (CE) behavior has been fluctuating since the year 2000.
What have been the causes of these changes? In your response, include a graph