Chapter 13 Outline
A. Definitions and General Comments
1. Inflation is defined as a continuing increase in the price level.
2. It is important to distinguish inflation from a once-and-for-all increase in the price level.
a. This distinction is important because in cases of inflation, policies are needed to keep the price level from continuing in an upward spiral; such policies are unnecessary with a one-time increase in the price level.
3. During inflationary periods, prices in general are increasing.
a. Inflation does not mean that all prices are increasing.
4. Deflation is a continuing fall in the price level.
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