IB ECONOMICS: Global Inflation

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Another year of low prices will create strains on the world economy..

Studying for IB Economics?

Follow this link to the podcast which considers the the impact of low inflation on the economy, with particular reference to falling oil prices.

The Economist; Editors Picks, 31st December 2015

For a simple explanation of why oil prices are falling please see the following blog post- you will find it helpful.

IB Economics: A simple explanation of falling oil prices


Consider the following questions as you listen

  1. Why are low prices not always desirable for an economy?
  2. How have oil prices affected global inflation?
  3. What does the term “tight labour market” mean
  4. Some key definitions that will be useful:

INFLATION: A sustained increase in the general price level of goods and services  

HEADLINE INFLATION: A measure of inflation excluding items that face volatile price movements such as food and energy

CORE INFLATION: A measure of total inflation within an economy, including commodities such as food and energy which are volatile

DEFLATION: A decrease in general prices of goods and services; when the rate of inflation falls below zero

DISINFLATION: A reduction in the rate of inflation

LOWFLATION: Ultra low inflation

STAGFLATION: High inflation rate, slowing down of the economic growth rate, increased unemployment and decline in spending.