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Economic Definition of pure inflation. Defined.

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Term pure inflation Definition: Inflation that occurs when all prices and nominal values in the economy increase by exactly the same percent. This is a theoretical technique used to analyze inflation and establish a benchmark for comparison, but is unlikely to occur in the real world. Pure inflation occurs, for example, if every product price, every factor price, and every asset valuated in nominal terms, increases by the same percent. The key conclusion is that pure inflation has absolutely no impact on the real economy. Whatever could be produced, consumed, or purchased before the pure inflation can also be produced, consumed, or purchased after.

 

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