INFLATIONARY SPIRAL Meaning and
Definition
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An inflationary spiral refers to a self-reinforcing cycle that occurs when increasing inflation leads to rising prices, which in turn stimulates further inflationary pressures. This spiral occurs due to a multitude of interrelated factors, including market mechanisms, supply and demand dynamics, and changes in consumer behavior.
As inflation increases, the prices of goods and services rise, leading to a decrease in the purchasing power of money. Consequently, consumers reduce their spending, causing businesses to experience a decline in sales. In response, companies may attempt to maintain profitability by increasing their prices, further exacerbating inflation. This price increase reduces consumers' purchasing power even more, initiating a vicious cycle of increasing inflation rates and prices.
Furthermore, an inflationary spiral may be fueled by expectations of future inflation. If individuals and businesses anticipate that prices will continue to rise, they may adjust their behavior accordingly. Consumers may choose to make purchases sooner rather than later, contributing to increased demand and further driving up prices. Similarly, businesses may raise their prices in anticipation of future inflation, adding fuel to the inflationary spiral.
Central banks often intervene to counteract inflationary spirals by adjusting interest rates, tightening monetary policy, or implementing other measures to stabilize prices. Breaking the cycle requires restoring confidence in the economy and curbing inflationary expectations. By addressing underlying causes and implementing appropriate measures, policymakers aim to prevent inflation from spiraling out of control and maintain stable economic growth.
Common Misspellings for INFLATIONARY SPIRAL
- unflationary spiral
- jnflationary spiral
- knflationary spiral
- onflationary spiral
- 9nflationary spiral
- 8nflationary spiral
- ibflationary spiral
- imflationary spiral
- ijflationary spiral
- ihflationary spiral
- indlationary spiral
- inclationary spiral
- invlationary spiral
- inglationary spiral
- intlationary spiral
- inrlationary spiral
- infkationary spiral
- infpationary spiral
- infoationary spiral
Etymology of INFLATIONARY SPIRAL
The etymology of the term "inflationary spiral" can be broken down as follows:
1. Inflation: The word "inflation" originates from the Latin word "inflat-" which means "to blow up". It first appeared in the English language in the mid-16th century and referred to the action of inflating or puffing up something.
2. Inflationary: The adjective "inflationary" is derived from the noun "inflation" by adding the suffix "-ary", which typically means "pertaining to" or "connected with". "Inflationary" refers to something that is related to or causes inflation.
3. Spiral: The term "spiral" comes from the Latin word "spiralis", meaning "winding or coiling in the form of a spiral".
Similar spelling word for INFLATIONARY SPIRAL
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