The Effects of Inflation and Policies to Sustain Low Inflation (HSC SSCE Economics): Flashcards
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Nominal wage
Nominal wage
Pay in dollar terms, not adjusted for inflation
Stagflation
Stagflation
Simultaneous rising inflation and unemployment
International competitiveness
International competitiveness
Ability of economy's exports to compete in global markets
Purchasing power parity
Purchasing power parity
Exchange rates adjust to reflect real purchasing power
RBA inflation target range
RBA inflation target range
2-3% per annum
Phillips curve
Phillips curve
Inverse short-run relationship between unemployment & inflation
Primary policy tool for maintaining low inflation in Australia
Primary policy tool for maintaining low inflation in Australia
Monetary policy
Pre-emptive monetary policy
Pre-emptive monetary policy
Adjusting rates to prevent inflation before it emerges
Benefits of small positive inflation
Benefits of small positive inflation
Allows price adjustments, avoids deflation risks
Effect of high inflation on business investment
Effect of high inflation on business investment
Creates uncertainty, discourages long-term investment