2.1.1.b Low and stable inflation

Low and stable inflation:

• definition of inflation
• definition of deflation
• measurement using consumer price index (CPI)
• types of inflation:
  • demand pull
  • cost push.
• relationship between inflation and interest rates
• impact of inflation on:
  • prices
  • wages
  • exports
  • unemployment
  • menu costs
  • shoe leather costs
  • uncertainty
  • business and consumer confidence
  • investment.