2. What is inflation? Give three different ways to measure it. (a) Find out the U.S....

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2. What is inflation? Give three different ways to measure it. (a) Find out the U.S. rates of inflation for 1979-2018 and plo

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Answer 1

Answer #1

Inflation refers to the increase in the general price level of an economy. It states the rate at which prices increase in an economy.

The three ways to measure it are:

1. Consumer price index

2. Producer price index

3. Personal consumption expenditure price index

A) The graph is below:

Inflation 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 -2

B) Cost push inflation is the increase in the price level which occurs when the cost of producing goods and services increases due to a supply shock.

Demand pull inflation occurs when the prices of goods and services increase when demand for the good increases manyfold due to external factors, say greater awareness among people on the benefits of the good.

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Answer 2

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2. What is inflation? Give three different ways to measure it. (a) Find out the U.S....

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