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Chapter 22: Q 16 (page 553)

What has been a typical range of inflation in the U.S. economy in the last decade or so?

Short Answer

Expert verified

The U.S. economy depicts an annual inflation rate range between 2% to 4% between last decade or so.

Step by step solution

01

CPI

In US economy inflation is measured by consumer price index (CPI).

A price index where the weighted average of prices of a basket of consumer goods and services is examined.

02

Step 2. US

CPI is one the most frequently used index in the economy for measuring inflation and deflation . It can also be compared with PPI According to CPI of US in last decade it shows inflation range between 2% to 4%.

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Most popular questions from this chapter

If inflation rises unexpectedly by 5%, would a state government that had recently borrowed money to pay for a new highway benefit or lose?

Describe a situation, either a government policy situation, an economic problem, or a private sector situation, where using the CPI to convert from nominal to real would be more appropriate than using the GDP deflator.

Why does “substitution bias” arise if we calculate the inflation rate based on a fixed basket of goods?

Why does the “quality/new goods bias” arise if we calculate the inflation rate based on a fixed basket of

goods?

What is the difference between the price level and the rate of inflation?
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