What is a Low and Stable Rate of Inflation? | IB Macroeconomics | PREVIEW bradcartwright.com

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In this step, you'll learn about low and stable rate of inflation, an important macroeconomic goal of every government on the planet. Inflation is defined as a persistent increase in the average price level in the economy and must not be confused with an increase in the price of a particular good or service. There are two types of inflation, demand pull and cost push, which are caused by increases in aggregate demand and costs of production respectively. With the neoclassical model, you can visualize how these two types of inflation work and how to keep inflation low and stable."