Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
7 Cards in this Set
- Front
- Back
Cost Push Inflation |
Inflation caused by rising business costs such as labour and raw materials |
|
Menu Costs |
Costs to firms having to make repeated price changes |
|
What causes cost push inflation? |
Increased wages (trade unions) Increased cost of production Rising Taxes Rising costs of imported goods (oil) |
|
Cost Push effects on employment |
Reduces unemployment Firms want to sell more More workers |
|
Cost push effects on wages |
Have to rise Workers need more money So they can afford the general standard of living |
|
Cost push effects on exports |
If price rises it is difficult to sell in overseas markets. Go out of businesses. Cyclical effect |
|
Why is a sustained rate of inflation important to a countrys economic growth? |
It drives up consumer spending as they expect prices to increase. Therefore theyd spend more before prices rise further therefore more gdp |