Comm6 - Alex Yang Goetz-2 Econ IB SL 14 February 2010...

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Alex Yang Goetz-2 Econ IB SL 14 February 2010 Commentary #6 Inflation is a rise in aggregate price levels which reduces the “purchasing power” of money. When inflation occurs each dollar of income will buy fewer goods and services than before. The inflation rate is determined by calculating the percent change in prices of a “market basket”, a certain number of commonly purchased goods in one calendar year. The consumer price index measures the overall price levels. CPI is calculated by the “market basket” of the current year divided by the same “market basket” in the base year then multiplied by 100; if the CPI is greater than 100 then there is inflation and if it is less than 100 there has been deflation, a fall in aggregate price levels. China experiences growth and development for a variety of reasons which is reflected in their real gross domestic product (GDP), all final goods and services produced in a country in a calendar year with adjustments to price changes. This increase in rGDP can be demonstrated
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Comm6 - Alex Yang Goetz-2 Econ IB SL 14 February 2010...

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