Price Levels and Inflation

key terms

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economic fluctuations

fiscal policy

GDP

investment

weighted average

monetary policy

Inflation rates for the US and Europe are illustrated below.

Inflation 1971-2007 in the US and Euro area
Inflation rate in 2007 across the Euro area

Note: CPI measures of inflation were not available for every member or the EU, so I use the GDP deflator for my price level to calculate inflation – though not the same as CPI it does give a similar picture of what is happening with inflation.

Note: The Euro Area inflation rate is from a weighted average of price levels for the members of the EMU.

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