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  • ) 100 Where P 1. Is The Current Price Level and P 0 - PDF

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    12 views20 pages

    ) 100 Where P 1. Is The Current Price Level and P 0 - PDF

    Uploaded by

    Faris Khalid

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 20
    12. inrtation Chapter Key Ideas From Rome to Rio de Janeiro ‘A. Inflaion isa very old problem and some counties even in recent times have experienced rates as high as 40 percent per month B. The United C. Why docs inflation occur, how do our expectations of inflation influence the evonomy, i there a tuadeoff between inflation and unemployment, and how docs inflation affect the interest rate? tates has low inflation now, bur during the 1970s the price level doubled. Outline |. Inflation and the Price Level FIGURE 12.1 Inflation Versus a One-Time A. Inflation is a process in which the price Rise in the Price Level Level i rising and money i losing value 1. Inflation is arise in the price lve, hoe notin the price ofa particular ‘commodity, ae (ii ateg 2. Figure 12.1 illustrates the woe pice! distinction between inflation and a ‘one-time tise in the price level, gue 3. The inflation rte isthe percentage g * ‘change in the price level: that is, the B10 inflation rate is (P,—P)IP] «100 | where P, isthe current price level * ann P, last yea’ price keel a 4, Inflation can result from either an Year - increase in aggregate demand—

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