Rising relative prices or inflation: why knowing the difference matters

Owen Humpage

Economic Commentary, 2008, issue Jun

Abstract: Almost everyone uses the word inflation to refer to any increase in prices, but it ought to be reserved for a just one kind of price increase. True inflation has a different cause?and a different cure?than the price increases of goods and services caused by constantly changing supply and demand conditions. The Federal Reserve can and should act to control inflation, but when relative-price changes are putting pressure on businesses and consumers, the Fed can do little.

Keywords: Consumer price indexes; Inflation (Finance) (search for similar items in EconPapers)
Date: 2008
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