The Relationship Of Main Economic Indicators And CPI

Inflation rate is a very important index to measure the situation of a country's economy. Through its influence on investment, deposit, consumption, debit and credit market and stock market and income relocation, inflation rate can influence the development of a country's economy. Normally speaking, mild inflation can stimulate the economy, while the sharp inflation does strong damage to the economy. Because of these, it is an important function of the central bank to make its county's inflation rate under control. To make the suitable policy, the reason of inflation and the relationship between inflation and other macro economic indexes must be known.This paper uses the empirical method to analyse the relationship between GDP, M₂ ,stock price index and CPI in America and China respectively. Besides, since the growth rate of the economic index has the advantage of steadiness and traversal over the absolute economic index, this paper do some empirical study on the relationship between GDP growth rate, M₂ growth rate and stock price returns and the CPI rate.This paper analyses the different results of the empirical study in America and China. In its last part, based on the measures of controlling the inflation that other countries especially America have taken and those measures that China have taken to control the inflation after the reform and opening-up, according to the situation of China, this paper bring forward some typically targeted measure to control and prevent the inflation.