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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.
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