Inflation

1- What is inflation?

Inflation can be defined as the rises in overall price level in the economy i.e. rise in prices of all the goods and services.

-what are the causes of inflation?

Inflation is the devastating condition when prices just keep going up, eating away at your standard of living. There are three main causes: demand-pull, cost-push, and monetary expansion.

-Is inflation desirable and what can be done to control Inflation in a market economy?

To control inflation, the Fed must use contractionary monetary policy to slow economic growth. If the GDP growth rate is more than the ideal of 2-3%, excess demand can generate inflation by driving up prices for too few goods.

2- What is the Consumer Price Index (CPI)?

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

-How has the CPI behaved since the year 2000?

Since the year 2000, the CPI has been inconstant. It decreased from 2000 to 2005 when find another high in the inflation level. From that period of 2005 it slightly decreased until 2008 when it has known it highest level. From 2008 to 2012 this consumer price index decreased considerably the following year and kept become as a saw tooth.

The cause of this change could be attributed to the increase and decrease of the good’s prices.

3- What is the Producer Price Index (PPI)

The Producer Price Index (PPI) is programs set to establish the change receive over time in the trade price by local manufacturers for their production. The prices involved in this program come from the primary operation of number of products and services (www.bls.gov/PPI)

4- What is the Consumer Expenditure Survey (CE)?

The Consumer Expenditure Survey (CE) is a the program in charge of deliver both, interview and diary study in order of carrying fact about Us consumers characteristics which include data of expenditure, income and...