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Inflation-sustained general rise in prices
Inflation rate-change
in average prices in
an economy over a
given period of time.
Retail Price
Index(RPI)
Consumer Price
Index(CPI)
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Creeping inflation-prices rise few percent
every year
Hyper-inflation- large increases in price each
year
Price index for year t
Price index for previous year
25
2007-2013 Inflation rates(CPI)
20
15
Ukraine
Russia
Great Britain
10
China
South Korea
Usa
5
0
2007
-5
2008
2009
2010
2011
2012
2013
Demand-pull
Inflation
Cost-push
Structural(Demandshift)
•
•
•
Was caused by the war.
7 000 000 000 000% in 1923
Other countries that suffered inflation at that
time-Austria, Hungary, Poland, USSR
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Yugoslavia broke. Government printed money.
Unemployment rose to 30%
New currency “Dinar” was created.
Inflation 5 000000000000000%(quadrillion)
12 Nov. 93 1 Deutsch mark=1million new dinars
15 Dec.93 1DM=3.7 billion new dinars
End of December 1DM=3 trillion new dinars.
New new dinar created
Novi dinar eliminated inflation

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Unemployed-those of working age who are
without work, but who are available for work
at current wage rates
Labour force-those who are employed and
unemployed.
UK government definition: Unemployedpeople of working age who are without work,
available to start working within 2 weeks and
actively seeking employment, or waiting to
take up an appointment
Feb 2013
European Unemployment Data, courtesy of Eurostat
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Voluntary and Involuntary
Frictional Unemployment
Cyclical Unemployment
Structural Unemployment
Seasonal Unemployment

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
To employee-loss of earnings
Lack of money cause problems in families
Government gets less taxes (VAT)
Firms lose profits
Workers lose additional wages(higher output)
General increase of violence and crime
Unemployment
USA inflation and unemployment
rates during the 1960s
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Inflation and unemployment are essential for
economy
Depending on inflation, unemployment
changes.
Inflation is more crucial to control.
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http://index.minfin.com.ua/index/infl/
http://www.inflation.eu/inflationrates/china/historic-inflation/cpi-inflationchina.aspx
Sloman,J. Economics Pearson 2012 8th edition
Anderton A. Economics Causeway press 2007,
4th edition