Thursday, June 28, 2012

Inflation and Real Growth

What increases faster, prices or real output?

Graph #1: Real Output relative to the Consumer Price Index

From the late 1940s to the mid-60s, real output increased a lot faster than prices. Then, until the early 1980s, prices went up a lot faster (so the line on the graph goes down). Since then, they change at about the same rate.

This graph fascinates me because the trend-changes are so distinct.

// related post: Another look at prices and output, 1 June 2012

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