| A | B |
|---|
| inflation | a general increase in prices |
| purchasing power | the ability to purchase goods and services |
| price index | a measurement that shows how the the average price of a standard group of goods changes over time |
| Consumer Price Index | a price index determined by measuring the price of a standard group of goods meant to represent the typical "market basket" of a typical urban consumer |
| market basket | a representative collection of goods and services |
| inflation rate | the percentage rate of change in price level over time |
| core inflation rate | the rate of inflation excluding the effects of food and energy prices |
| hyperinflation | inflation that is out of control; very high inflation |
| quantity theory | theory that too much money in the economy causes inflatin |
| demand-pull theory | the theory that inflation occurs when demand for goods and services exceeds existing supplies |
| cost-push theory | theory that inflation occurs when producers raise prices to meet increased costs |
| wage-price spiral | the process by which rising wages cause higher prices and higher prices cause higher wages |
| fixed income | income that does not increase even when prices go up |
| deflation | a sustained drop in the price level |
