Основы экономики. Земскова Л.П. - 23 стр.

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23
history. The 1980s were a period of inflation stabilization in industrial
countries, but in many developing countries inflation increased sharply.
2. The persistence of inflation results from the slowness of wages and prices to
adjust to reductions in aggregate demand. The slow adjustment of wages and
prices results in part from the important role of expectations of inflation. The
credibility of government promises to follow anti-inflationary policies
affect inflation.
3. The Phillips curve shows a trade-off between inflation and unemployment.
The higher the rate of inflation, the lower the rate of unemployment.
4. Because inflation reacts slowly to reductions in aggregate demand,
policymakers face a painful policy choice. If they reduce aggregate demand,
it will take some years of unemployment to get rid of the inflation. If they do
not fight the inflation, it will not get better and may well keep rising.
5. Inflation does have real costs. Those costs depend on two factors: first,
whether the inflation is expected, and second, the extent to which the
economy has adjusted its institutions to deal with inflation. As long as
inflation continues, the economy learns to live with it. Adapting to inflation
is a way of reducing its costs.
6. The inflation rate is equal to the growth rate of nominal money minus the
growth in real money demand. If money growth persists at high levels over
long periods, inflation and nominal money growth are very closely related.
The inflation tax is the cost imposed by inflation on holders of money,
whose real balances lose value as the price level rises.
7. Budget deficits financed by money creation may lead to inflation. In
industrialized countries deficits are to a large extent debt-financed.
8. A hyperinflation is a period of extremely rapid growth in nominal money
and consequently rates of inflation that reach 1000 percent per year and
more. Hyperinflations are caused by large budget deficits financed by money
creation and result in sharp drops in real money holdings.
9. There are proposals to reform the monetary system to prevent high money
growth in the future. One such proposal is that economies should return to
the gold standard, which kept inflation rates low in the 19
th
century.
KEY TERMS
Phillips curve
Stagflation
Inflation rate
Unexpected inflation
Gold standard
Indexation
Hyperinflation
Flight from money
Inflation tax
Burden of the national debt

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