Englisch AS2 Fourie at Universität Passau

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Exemplary flashcards for Englisch AS2 Fourie at the Universität Passau on StudySmarter:

Explain Deflation

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Explain Core Inflation

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Runaway Inflation

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Hyperinflation

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Stagflation

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Wage inflation

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SHRINKFLATION

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TRUMPFLATION

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HEADLINE INFLATION

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CREEPING INFLATION

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AGFLATION

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ASSET INFLATION

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Exemplary flashcards for Englisch AS2 Fourie at the Universität Passau on StudySmarter:

Englisch AS2 Fourie

Explain Deflation

It is the opposite of inflation and is often caused when an asset bubble bursts. 

- can turn a recession into a depression.  

Once this starts, it is harder to stop than inflation. 

The current annual rate of inflation in the Eurozone is 0.1 per cent, and the core inflation rate is about one per cent. Seven member states are experiencing some deflation. 

In these countries, notably Italy, Spain and Cyprus, deflation is required to restore their competitiveness because in a currency union competitiveness can only be restored by lowering prices. 

Englisch AS2 Fourie

Explain Core Inflation

This reflects the long-term trend in a particular price level.  

It is a measure of inflation that excludes certain items that face volatile price movements. 

This is calculated using the consumer price index (CPI) 

The Federal Reserve uses the core inflation rate to guide it in setting monetary policy. The Fed doesn't want to adjust interest rates every time gas prices go up.

Englisch AS2 Fourie

Runaway Inflation

Turkey's runaway inflation hits real economy. 

Despite a sharp interest rate hike by the Turkish central bank, the country's currency has continued its slide amid skyrocketing inflation. Turkish businesses are increasingly feeling the pinch. Over the last decade, annual inflation saw its lowest level at 3.99 percent in March 2011, while it peaked at 25.24 percent in October 2018. 

Runaway inflation and stagnant salaries are causing many families to have to cut back on nonessential items to be able to pay for necessities like food and clothing

Englisch AS2 Fourie

Hyperinflation

Extremely rapid or out of control inflation.  

Price increases are so out of control that the concept of inflation is meaningless. 

This kind of inflation is a rare event, but it occurred as many as 55 times in the 20th century in countries such as China, Germany, Russia, Hungary and Argentina.  

IMF sees Venezuela inflation at 10 million per cent in 2019. 

Venezuela's inflation rate will reach 10 million percent next year, the International Monetary Fund (IMF) said on Tuesday in a report forecasting that one of the worst hyperinflation crises in modern history will further deepen.

Englisch AS2 Fourie

Stagflation

A combination slow or no economic growth, accompanied by high unemployment and rising prices. 

It is an unnatural situation because inflation is not supposed to occur in a weak economy.  

Economic policy makers across the globe try to avoid this phenomenon at all costs because a country's citizens will be highly affected. 

Occurs when the government or central banks expand the money supply at the same time they constrain supply as in the United States in the 1970s. The federal government manipulated its currency to spur economic growth and at the same time, it restricted supply with wage-price controls.   

In 2004, Zimbabwe's policies caused stagflation. The government printed so much money it went beyond stagflation and turned into hyperinflation. 

Englisch AS2 Fourie

Wage inflation

Wage inflation is one element of cost-push inflation which can drive up prices of a company's goods and services. 

Workers' pay rises faster than the cost of living.  

This occurs in three situations. First, when there is a shortage of workers (unemployment is below 4 percent). Second, when labor unions negotiate ever-higher wages. Third is when workers control their own pay as CEOs effectively do by sitting on many corporate boards.

Englisch AS2 Fourie

SHRINKFLATION

The theory goes: if a chocolate bar gets smaller but the price stays the same, that is a form of inflation because you are paying more for each bite. 

Shrinkflation leaves UK shoppers getting less for their money! 

Statisticians find that bread, cereals and chocolate bars are among the items most likely to be affected. 

Shrinkflation shot to prominence five months after the EU referendum when Mondelez, maker of Toblerone, said it was reducing the size of the triangular chocolate bar because of higher costs.

Englisch AS2 Fourie

TRUMPFLATION

A number of policies currently at work in the US are seen as inflationary. Tax cuts will boost aftertax incomes, curbs on immigration are expected to push wages up and protectionist policies are expected to raise import prices. Trumpflation is coming. Everyone knows it! 

Trumpflation indicators emerged in the immediate aftermath of Donald Trump's election as president. When Donald Trump emerged as the victor of the 2016 presidential election early in the morning of November 9, markets began to indicate strongly that higher inflation was on the way. 

Englisch AS2 Fourie

HEADLINE INFLATION

This is the raw inflation figure that is released monthly by the Bureau of Labor Statistics.  

This figure is not adjusted for seasonality or for the often-volatile elements of food and energy prices, which are removed in the core CPI. 

Comparisons of headline inflation are typically made on a year-over-year basis. 

Also known as top-line inflation. 

Englisch AS2 Fourie

CREEPING INFLATION

When prices rise 3 percent a year or less.  

 

This kind of mild inflation makes consumers expect that prices will keep going up which boosts demand.  

 

Consumers buy now to beat higher future prices. This inflation drives economic expansion.

Englisch AS2 Fourie

AGFLATION

An increase in the price of cultivated food products caused by increased demand, especially as a result of the use of these products in alternative energy sources. 

Rising food prices caused by increased demand for agricultural commodities. 

In 2007, agflation hit everything from cereal and baked products to meat, poultry, fish, and eggs.

Englisch AS2 Fourie

ASSET INFLATION

Occurs in a particular asset class, for example real estate and gold.  

It is often overlooked by central banks and other inflation-watchers when the overall rate of inflation is low.  

The subprime mortgage crisis and subsequent global financial crisis demonstrated how damaging unchecked asset inflation can be. 

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