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What is the difference between the price index and the rate of inflation? What is deflation?...

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

What is deflation? Disinflation?

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Answer #1

Answer)

Using of CPI to measure inflation.

This formula will give the rate of inflation from last year to this year. Inflation is that rate at which prices rise assuming that nothing else about the good or service changes.

Deflation is when the general price levels in a country are falling Deflation can be caused by an increase in productivity, a decrease in overall demand, or a decrease in the volume of credit in the economy.

Disinflation is a decrease in the rate of inflation, a slowdown in the rate of increase of the general price level of goods and services in a nation's gross domestic product over time.

Deflation is a decrease in general price levels throughout an economy, while disinflation is what happens when price inflation slows down temporarily.

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