Economic essays on inflation

 

inflationUK inflation since 1989.

  • Causes Inflation – Inflation is caused by excess demand in the economy, a rise in costs of production, rapid growth in the money supply.
  • Costs of Inflation – Inflation causes decline in value of savings, uncertainty, confusion and can lead to lower investment.
  • Measuring Inflation – Inflation is measured by CPI and RPI. It is calculated by finding a typical basket of goods. Giving a weighting to goods and measuring price changes every year.
  • How to solve inflation. Policies to reduce inflation, including monetary policy, fiscal policy and supply-side policies.
  • Monetarist Theory – Monetarist theory of inflation emphasises the role of the money supply.

 

See also notes on Unemployment