Using diagrammatic illustrations where necessary, write brief notes on the following concepts. i. Demand-pull and cost-push inflation ii. Consumer Price Index iii. GDP deflator iv. Cost of expected inflation v. Cost of unexpected inflation

Using diagrammatic illustrations where necessary, write brief notes on the following concepts. i. Demand-pull and cost-push inflation ii. Consumer Price Index iii. GDP deflator iv. Cost of expected inflation v. Cost of unexpected inflation

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Unemployment And Inflation

Section: Chapter Questions

Problem 4.10P

See similar textbooks

Related questions

Q: a. Core inflation is the inflation that consumers feel when they buy their core products. b.…

A: In an economy, Inflation is a macroeconomic concept that is used to compare various economic…

Q: A central bank pledges to reduce the inflation rate from 10% to 3%. People reduce their inflation…

A: Inflation is the rise in average general price level over period of time . It reduces the value of…

Q: Distinguish between demand-pull inflation and cost-push inflation. Which of the two types is most…

A: Inflation refers to an abnormal hike in the price level of goods and services in the economy, so if…

Q: Explain the two costs of inflation from the perspective of economists

A: Meaning of Inflation: Inflation generally arises when there is an excessive increase in the level…

Q: Which of the following statements would you DISAGREE with Explain why ? 1. Higher than anticipated…

A: According to the given statements, three statements are true and one statement is false.

Q: Discuss critically about demand-pull and cost-push inflation with the help of graphically and…

A: Inflation is defined as a prolonged rise in the overall price level, resulting in a loss of money's…

Q: Examine the causes of at least two (2) main types of inflation

A: Inflation is commonly described as a rise in the cost of goods and services in a given economy over…

Q: Why are we typically more concerned with unanticipated inflation than we are with fully anticipated…

A: A rate of inflation that is expected by the market participants in the economy is anticipated…

Q: Insert the missing word or phrase: 1. _____ _________ _________ - the increased costs associated…

A: Answer: 1. Shoe leather cost- the increased costs associated with making transactions that arise…

Q: Differentiate THREE (3) types of inflation.

A: Inflation can be defined as persistent rise in general price level.

Q: Which statement is CORRECT? The Consumer Price Index is considered the best measure of long-run,…

A: ) Consumer price index (CPI) is defined as the average change in the prices of fixed baskets of…

Q: Actual inflation is the sum of three separate components: ... a.Validated, expected and output gap…

A: Inflation is defined as the rate at which prices increases. There are two types of inflation that…

Q: At high levels, inflation, whether expected or unexpected, occasions considerable costs on society.…

A: Inflation is defined as the rate at which prices rise over time. Inflation is usually defined as a…

Q: What are the costs of expected inflation? Describe briefly

A: Inflation refers to the situation of increasing price level in the economy.

Q: ‘If the economy has high but stable inflation, the government has much to lose and little to gain by…

A: The inflation is the rise in the aggregate price level. The inflation would result in the price…

Q: What sort of event could lead to a simultaneous decrease in both inflation rate and the unemployment…

A: Inflation is defined because the rate at which prices rise over time. Inflation is sometimes defined…

Q: How does Philip's Curve Theory applies to the relationship of Inflation Rate, Employment Rate and…

A: Inflation and unemployment have a stable and inverse relationship, according to the Phillips curve,…

Q: a government is facing high inflation, then it will take an action as following: I. increase…

A: Answer: Correct option: 1 (increase taxes, increase discount rate) Explanation: Inflation refers to…

Q: Which of the following is the most correct statement about the relationship between inflation and…

A: The Phillips Curve shows that tehre exists an inverse relationship between inflation and…

Q: Economists widely agree that the Consumer Price Index understates the true U.S. inflation rate.…

A: Consumer price index does not include imported goods.

Q: Define the term Average Inflation Rate?

A: The inflation rate is the rate of increase in the price level of an economy. For example, if the…

Q: Which of these is not a factor that causes demand-pull inflation? a. Private consumption b.…

A: Demand is the sum of the total quantity of commodities that the consumers are willing to purchase at…

Q: Using appropriate diagrams, explain the difference between demand-pull and cost- push inflation.

A: Inflation: Inflation is simply the rise in the general price level of goods and services over a…

Q: Explain (define) the terms given below with appropriate examples. a) Inflation b) Deflation c)…

A: a) Inflation: Inflation is the rate of rising prices over a given period of time. In general words,…

Q: The price-wage spiral is associated with which type of inflation? a. Cost push b. Demand pull c.…

A: The increased wages will result in increased income and increased demand for goods and services. As…

Q: Describe an example of demand-pull inflation. And describe an example of cost-push inflation.

A: Inflation is a situation in which general price level rise. As a result of inflation, there is…

Q: In this Decision Point you learned a little about inflation and inflation expectations. Apply what…

A: Real wage is the wage rate adjusted for inflation. Nominal wage does not account for inflation.

Q: The cost of inflation reduction is a large, permanent increase in unemployment. true or false

A: The Phillips curve basically depicts the relationship between inflation and unemployment, and the…

Q: Different countries experience different types of inflation. Which type of inflation is mostly…

A: Inflation refers to an increase in the general price level of several major goods and services in an…

Q: Explain what we can understand by expected inflation, inflation due to an increase in aggregate…

A: Inflation in an economy is referred to be as a rise in the general price level of goods and…

Q: What type of inflation is caused by an increase in the purchasing power of people? a. Cost push b.…

A: Cost push inflation occurs from a fall in aggregate supply, which raises inflation but reduces…

Q: Q.3.1 In a country with a population of 100 million people there are 20 million children under the…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Which of the below statements IS NOT CORRECT about the term "inflation" or its effect, as Charles…

A: The price of goods and services does not remain the same all the time. The prices can go up or down…

Q: Explain both demand-pull and cost-push inflation

A: Inflation is the rate of increase in the general price level in the economy over a period of time.…

Q: write brief notes on the following concepts. i. Demand-pull and cost-push inflation ii. Consumer…

A: Note: Since you have asked multiple questions, we will solve the first 3 question for you. If you…

Q: Which of the following is NOT true about consequences of high unanticipated inflation Select…

A: Unanticipated inflation: It means that there is an increase at a faster pace rather than expected.…

Q: What is the difference between cost-push inflation and demand-pull inflation? Explain the…

A: Meaning of Demand-Pull Inflation Demand Pull Inflation emerges when the total demand goes up…

Q: Using diagrammatic illustrations where necessary, write brief notes on the following concepts. i.…

A: "You asked for part ii, I am solving part ii only." Consumer Price Index: It is a measure of…

Q: Explain one harm associated with unexpected inflation that is not associated with expected…

A: Expected inflation is the inflation that economic agents expect in the future. Expected inflation…

Question

Answer iii

Using diagrammatic illustrations where necessary, write brief notes on the following
concepts.
i. Demand-pull and cost-push inflation
ii. Consumer Price Index
iii. GDP deflator
iv. Cost of expected inflation
v. Cost of unexpected inflation

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1- Introduction (iii)

VIEW

Step 2- Explanation

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=940, year 2=970, year 3=1000, and year 4=1070. Calculate two price indices, one using year 1 as the base year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Then, calculate the inflation rate based on the first price index. If you had used the other price index, would you get a different inflation rate? If you are unsure, do the calculation and find out.
If inflation rises unexpectedly by 5, indicate for each of the following whether the economic actor is helped, hurt, or unaffected: A union member with a COLA wage contract Someone with a large stash of cash in a safe deposit box A bank lending money at a fixed rate of interest A person who is not due to receive a pay raise for another 11 months
An increase in consumer confidence combined with an increase in nominal wages will Question 25 Not yet answered Marked out or P Flag guestion a. have an uncertain impact on P and increase Y. b. increase P and decrease Y. c. increase P and but have an uncertain impact on Y. d. decrease P and decrease Y. If inflation is 1 percent then we can conclude that a.all prices in the CPI basket increased. b. at least one price in the CPI basket increased. с.some prices in the CPI basket increased and some decreased. d. all prices in the CPI basket increased by 1 percent.
Another term used todescribe negative inflation is: a)hyperinflation b)deflation c)counter inflation d)GDP deflator
Explain with the support of graph(s), demand-pull and cost push inflation
Provide examples and explain your answer. If inflation rises unexpectedly by 5% indicate for each of the following wether the economic actor is helped, hurt, or unaffected. a. A union member with a COLA wage contract b. Someone with a large stash of cash in a safe deposit box c. A bank lending money at a fixed rate of interest d. A person who is not due to receive a pay raise for another 11 months
If inflation rises unexpectedly by 5%, indicate for each of the following whether the economic actor is helped, hurt, or unaffected: a. A union member with a COLA wage contract b. Someone with a large stash of cash in a safe deposit box c. A bank lending money at a fixed rate of interest d. A person who is not due tor receive a pay raise for another 11 months
The effects of inflation are seen in: a)goods, services, wages and income levels b)goods and servicesonly c)wages and incomelevels only d)services and wages only
What type of inflation is caused by an increase in the purchasing power of people? a. Cost push b. Demand pull c. Built in d. Chronic
The Consumer Price Index (CPI) is the common measure of inflation in the United States and is a Laspeyeres index. The Chained CPI (or similarly PCE Inflation), which are Paasche indices are offered forth as what might be "better" alternatives. a. Explain how the CPI is calculated and describe the things that you perceive to be right and wrong with the measurement b. What is the difference between CPI and Chained CPI? How would a move to Chained CPI likely affect inflation estimates? c. There have been proposals to move cost of living adjustments for social security and inflation adjustments for the federal poverty level (FPL) from CPI to the Chained CPI. What would be the long term effects of such a move for each? d. Changing the way inflation is calculated would also affect Real GDP estimates over time as well as the Real Wage. How would the estimates be affected over time and why? Be explicit.
Solve all subparts it correctly and explanations Q) whats is the difference between CPI, GDP Deflator, Hyper-inflation, demand pull inflation and cost push inflation? What is the best policy to control demand pull inflation? What is the impact on the value of currency impacted by hyper-inflation
Oil prices are on track to reach $100 a barrel this month for the first time in 2023 after surging by almost 30% sinceJune, after Russian and Saudi Arabian production cuts and rising demand from China. With many industries being heavily reliant on energy and transportation, what type of inflation would this leadto in South Africa?A. Demand-pull inflationB. Cost-push inflationC. StagflationD. Hyperinflation