Econ study guide 1 | Page 3

• Deflation Increases confidence of firms that investment is worth it as prices will rise A decrease in the average price level of goods and services in a nation, sustained over a prolonged period of time. • Anticipated deflation incentivizes savings over current consumption and investment Disinflation A decrease in the rate of inflation. *do not mistake with deflation! This is the rate; deflation is the price level. CPI Consumer price index • Measures prices of typical household, consumer goods; collected through regular survey. • Includes food, clothing, fuel, electricity, rents, DVDs, airline tickets, bus fares, laptops, phone + services, etc. Found by: