Inflation
Sustained rise in the general price level.
Inflation
Key definitions
Disinflation
Inflation rate falling but still positive.
Deflation
Sustained fall in the general price level.
CPI
Main UK inflation measure (ONS shopping basket).
Demand-pull inflation
AD rises faster than SRAS can respond.
Cost-push inflation
Rising costs shift SRAS left.
Phillips curve
Short-run inverse relationship between inflation and unemployment.
Menu costs
Costs of changing prices during inflation.
Shoe-leather costs
Time/resources spent reducing money holdings.
Bank of England target
2% CPI with ±1% tolerance band.
Key concepts
Cost-push and demand-pull need different AD/AS diagrams.
Phillips curve supports policy conflict evaluation.
Check UK inflation data.
Relevant tips
- Use AD/AS for demand-pull vs SRAS shift for cost-push.
- Reference Phillips curve when discussing unemployment–inflation trade-off.
Examples & case studies
- Diagram backlog: Phillips curve, demand-pull and cost-push on AD/AS.