Question

In one to two sentences, explain how the CPI changes when there is inflation and deflation, and

how the costs of goods and services change under each scenario. (2 points)

Answer 1

[AI-generated answer — Bot GPT 3.5]

When there is inflation, the CPI rises as the prices of goods and services increase. This results in higher costs for consumers. In contrast, during deflation, the CPI decreases as prices fall, leading to lower costs for goods and services.