1、Unit 6Text:Inflation（通货膨胀）1.Key words2.Measurement of Inflation3.Causes of Inflation4.Effects of inflation5.Translate the following into Chinese6.Questionsinflation rateprice indexconsumer price indexproducer price indexbase yeardemand-pull inflationcost-push inflationpotential outputfull employment
2、income distributionpanic buyingnatural rate of unemployment expectations inflationsupply-shock inflationcapital goodsThere are several different price indexes,each using a different bundle of goods.To track the movement of prices that are important to American households,the government collects pric
3、e data on the bundle of goods that represent how the average household spends its income.This index is called the consumer price index,or CPI.To determine the bundle,the government,through the Bureau of LaborStatistics of the Department of Commerce,conducts a Consumer Expenditure Survey.The informat
4、ion from the survey is then used to determine the importance of morethan 2,000 different expenditure categories.Weights are assigned to the expenditure categories to reflect the importance of each in household spending.Another different measure of prices is the producer price index,which measures th
5、e average level of prices of goods sold by producers.This index is useful because it gives us an idea of what will happen to consumer prices in the near future,eventually retailers will have to charge higher prices.These will be reflected in a higher CPI.1、Runaway or hyperinflation is an extreme for
6、mresulting from political or economic instability.The demand-pull and cost-push inflation that we now experience are more common forms.2、Supply shock:Supply-shock inflation results from infrequent drastic changes in the production cost of fundamental products.3、Expectations:Inflation can sometimes o
7、ccur simply because we expect it to.1、Income redistribution2、Inflation and the standard of living3、Unemployment4、Exports5、Buy now or later6、Hyperinflation1.Inflation is defined as a continued rise in the average level of prices.2.Price index measures the price level in any given year relative to a c
8、ommon base year.3.Demand-pull inflation is a rise in the average price level caused by excess demand at full employment.4.Individuals whose income fails to increase with the rate of inflation will find that their income will no longer maintain their standard of living.5.Inflation directs investment
9、into land and property,as these increase in value rapidly.6.Inflation harms exports as these goods and services are now more expensive in overseas markets.（1）Explain the definition of consumer price index and producer price index.（2）What are the causes of inflation?（3）Explain the definition of demand-pull inflation and cost-push inflation.（4）How would inflation affect your spending power?Can you avoid the effect of inflation?
