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A. A general rise in prices. 1. When prices rise, a person’s ability to buy goods and services goes down, which decreases purchasing power.

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Presentation on theme: "A. A general rise in prices. 1. When prices rise, a person’s ability to buy goods and services goes down, which decreases purchasing power."— Presentation transcript:

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2 A. A general rise in prices. 1. When prices rise, a person’s ability to buy goods and services goes down, which decreases purchasing power.

3 A. A measurement that shows how the average price of a standard group of goods and services changes over time.

4 A. Changes in the CPI from month to month help government to calculate the inflation rate. B. Inflation Rate- the percentage change in price level over time.

5 A. Quantity Theory-too much money is in the economy. B. Inflation occurs when suppliers increase the price of goods to meet increase costs. C. Demand Pull Theory-inflation occurs when the demand for a good or service exceeds the supply.

6 A. Lower Purchasing Power B. Fixed Income issues

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