Matakuliah
Tahun
: F0882 - Economic Analysis
: 2009
ENSURING PRICE STABILITY
Chapter 12
Learning Outcomes
• Definition and Impact of Inflation
• Modern Inflation Theory
• Dilemmas of Anti-Inflation Policy
Bina Nusantara University
3
Inflation Is a Fundamental
Constraint on Economic Policy
English Price Level and Real Wage, 12642002 (1270 = 100)
Consumer Prices in the United States,
1776-2003
Inflation Has Remained Low and Stable in
Recent Years
Money and Hyperinflation in Germany,
1922-1924
Demand-Pull Inflation Occurs When Too
Much Spending Chases Too Few Goods
An Upward Spiral of Prices and Wages Occurs When
Aggregate Supply and Demand Shift Up Together
The Short-Run Phillips Curve Depicts the
Tradeoff between Inflation and Unemployment
The Shifting Phillips Curve
Actual Unemployment Rate
and NAIRU
Actual and Predicted Inflation,
1995-1999