Chapter 14: Inflation and the Price Level
Explainer, notes, worksheet and data.
What you'll learn in this chapter
- explain what inflation is and distinguish common causes (demand-pull, cost-push, imported, policy-induced)
- analyse the effects of price level changes on consumers, firms and the wider economy
- understand how inflation is measured (e.g. CPI vs HICP in an EU context)
- outline the role of the ECB in maintaining price stability
Core ideas
Inflation is about sustained rises in the general price level. You’ll link inflation to purchasing power, competitiveness, wage demands, savings/real returns, and Ireland’s attractiveness for trade and FDI.
Exam focus
- definitions + classification: identify which type of inflation fits a scenario
- effects question: consumers vs firms vs economy (include competitiveness/FDI)
- EU angle: why HICP matters for comparing inflation across member states