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Could we have found a new key term? FLATION
Jim Riley
31st May 2009
Yes, you read it right – not inflation, not deflation, just flation! The Eurozone has just announced their latest inflation rate is 0% - on average prices have stopped rising. This article is predicting deflation in the months to come.
Questions:
1. Define the term “inflation” (2 marks)
2. Define the term “deflation” (2 marks)
3. Identify 2 economic consequences of inflation (2 marks)
4. With reference to the article, explain why deflation is not welcome (3 marks)