Inflation (OCR A-Level Economics): Flashcards

Sustained increase in price level; decreases purchasing power

Sustained decrease in price level; increases purchasing power

Decrease in rate of inflation; prices rising but slower

Extremely rapid or out-of-control inflation

Excess demand in the economy

Rising production costs

Falling prices → less production → lower wages → unemployment

Around 2%

Measured in current prices without adjusting for inflation

Adjusted for inflation; reflects true purchasing power

Consumer Price Index

RPI includes mortgage interest payments & housing costs

$\frac{CPI_{final} - CPI_{initial}}{CPI_{initial}} \times 100$

RPI (due to housing costs)

Monthly