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Chapter 22: Q 17 (page 553)

Over the last century, during what periods was the U.S. inflation rate highest and lowest?

Short Answer

Expert verified

There is more than one instance when this happens.

Step by step solution

01

Step 1. Definition

Inflation is the rate at which prices increase over a period of time. Inflation is a broad measure, For example, the increase in prices or the increase in the cost of living in a country.

02

Step 2. U.S.

In United States, period of deflation that is negative inflation is the period of world war I and world war II .

In 1930 inflation in the US was at its lowest. The reasons behind this is that time most banks were unregulated and uninsured and also because of feds policies . This was a period of great depression.

And highest level of inflation was in 1970 ,because of various reasons like central bank policy, Keynesian economic policy, the abandonment of the gold window, etc. all contributed to this.

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Most popular questions from this chapter

Table 9.4 shows the fruit prices that the typical college student purchased from 2001 to 2004. What is the amount spent each year on the “basket” of fruit with the quantities shown in column 2?

Name several forms of indexing in the private and

public sector.

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

goods?

How do economists use a basket of goods and services to measure the price level?

Why is the GDP deflator not an accurate measure of inflation as it impacts a household?
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