1. Inflation
Chapter 8, Unit 4, Part IV

2. Inflation:
A general rising of the level of prices (not all P rise at the same rate)
Rule of 70 also works for doubling time for price level
Ex: How long would it take for prices to double if the inflation rate is 10%?
7 years

3. Causes of Inflation Demand-Pull inflation
Spending increases faster than production
Too much money chasing too few goods
Too many consumers with ready cash or expectations for spending
Too many are employed causing wage inflation

4. Cost-Push or Supply-Side Inflation
Prices rise because of rise in per-unit production costs
Not enough supply of goods & services
Wage-push can occur as result of union strength
Supply shocks may occur with unexpected increases in the price of raw materials
Political cuts in supply
Could cause both output and employment to decline—real income declines.

5. Classwork—Page 157
Questions: 6 8 10 14 15