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Chapter 7

Inflation

1. Key terms – matching and translation.

Read aloud the key term and its definition so that they make up a single sentence. (Remember about the agreement between the subject and the predicate!). Translate the sentences you have arrived at from English into Russian.

Set 1

“deflating” nominal values	Cost of upward revisions of price schedules.
demand-pull inflation	Rising demand in one sector causes price hikes; falling demand in another causes layoffs.
discomfort (misery) index	An upward movement in general prices.
inflation	Adjusting for price level changes by dividing monetary variables by (1% of) a price index.
real values	Occurs, e.g., if costly resources are increasingly wasted and misused by incompetent managers.
cost-push inflation.	Low levels of persistent price hikes.
hyperinflation	The sum of the rates of inflation and unemployment.
menu costs of inflation.	Variables measured by money but adjusted for price level changes.
composition-shift inflation	Arises, e.g., if the money supply grows too rapidly.
creeping inflation	Experienced in Germany after World War I.

Set 2

1 deflation	Measures changes in wholesale prices.
2 supply side inflation	Wage hikes are used as an excuse to raise prices by huge firms.
3 administered price inflation	It is common for people to hedge when guarding against this type of inflation.
4 expectational inflation	Double-digit annual rates of inflation.
5 galloping inflation	A decline in the general price level.
6 anticipated inflation	Measures average prices by comparing the costs of consumer market baskets overtime.
7 Consumer Price Index (CPI)	Speeded by peoples' concerns and beliefs about future inflation.
8 distortion costs of inflation	Current dollar values of economic variables.
Producers Price Index (PPI)	Caused by a leftward shift of the Aggregate Supply curve.
10 nominal values	Arise, in part, because inflated prices rise at different rates.

2. Text translation.

Translate the text from English into Russian in writing paying particular attention to the translation of the economic terms in bold as well as words and phrases relevant to the subject of the text. Read out your translation in class and introduce the necessary corrections.