Larry and Moe are having an argument. Larry believes that over the past year, the economy is experiencing rapid inflation, while Moe says that the economy actually experienced disinflation during this period. The easiest way for Larry and Moe to settle their argument is to look at GDP figures for the past year.

Question

Quizplus · Accepted Answer

GDP figures alone cannot determine whether an economy is experiencing inflation or disinflation. Inflation and disinflation are measured through changes in the overall price level of goods and services in an economy, and GDP only measures the total output of goods and services. Other economic indicators such as the Consumer Price Index (CPI) or the Producer Price Index (PPI) would be more useful in determining whether the economy is experiencing inflation or disinflation.

Larry and Moe Are Having an Argument