Assume the inflation rate falls from 4 percent to 2 percent. This means that

Name: Assume the inflation rate falls from 4 percent to 2 percent. This means that
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When the inflation rate falls from 4 percent to 2 percent, it means that the price level is increasing more slowly. There may still be an increase in the price level, just at a slower rate than before. Deflation would occur if the overall price level was actually decreasing. Real GDP is not necessarily affected by changes in the inflation rate.

Assume the Inflation Rate Falls from 4 Percent to 2