ECON1132 Chapter Notes -Hyperinflation

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Consumer price index: a price index based on a market basket of consumer goods the previous year] x 100 and services purchased by the typical household: market basket calulations: how many units x price of unit + same = cpi for that year, rate of inflation would be: [(current year last year) / last year] x 100, sometimes an arbitrary year is chosen, find the cpis of each year by dividing the two years and multiplying by 100 then cpis comparing the two. Inflations are always unanticipated to some extent by inflation, the extra costs of managing cash inflation: takes time to fully adjust, excess demand in slow to adjust markets, redistributes purchasing power from consumers who favor the products of the relatively higher priced, quick to adjust industries to the consumers who favor the products of the relatively lower priced, slow to adjust industries.

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