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Price Level:Overall average level of nominal prices in the economy can be calculated, most often as a weighted average of the prices of individualservices and goods (with weightings reflecting the significance of each product in overall spending or output). Price levels can be calculated for consumer spending, for producer inputs, forwholesale trade or for any other category of production. The most common measures of overall price level are consumer price index and gross domestic product deflator.
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Cyclical Fluctuations: Consider a situation where the value of money above trend indicates an unexpectedly high level of money in the recent past. The model predicts that this
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