<p>Related but not equivalent. I assume you mean <em>inflation rate</em> when you say inflation,</p>

<p>Let $p_t =$ price level at time t </p>

<p>=> inflation rate at time t $ = \frac{p_{t}-p_{t-1}}{p_{t-1}} = \frac{p_{t}}{p_{t-1}} -1 $</p>

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2015-05-12T19:50:46.470Z
2015-05-12T19:50:46.470Z
snoram
<p>Snoram is correct. Price level is a just that, the relative level of prices. Inflation/deflation is the act of moving up/down price levels. The inflation rate is the difference in price levels from one time period to another. </p>

<p>I.E. Year 1: Price level = 100 |  Year 2: Price level =105.</p>

<p>There was inflation in the economy (because price level increased). The inflation rate was 5%.</p>

<p>Another example:</p>

<p>I.E. Year 1: Price level = 177</p>

<p>In this example we do NOT know if the economy is experiencing inflation or deflation becuase we only have a single point in time and thus cannot determine the rate or direction of change.</p>

CC BY-SA 3.0
2015-05-12T21:43:36.330Z
2015-05-12T21:43:36.330Z
Stuart Allan
<p>Fairly straight forward, Can I assume that Price Level and Inflation are interchangeable when looking at these graphs together?</p>

<p>Generally, are they equivalent in Macroeconomics?</p>

<price-level>
Is Price Level equivalent to Inflation when looking at AD/AS and Phillips Curve graphs?
Ghost Koi
# Is Price Level equivalent to Inflation when looking at AD/AS and Phillips Curve graphs?

(Asked by: username_0 on 2015-05-12)

Fairly straight forward, Can I assume that Price Level and Inflation are interchangeable when looking at these graphs together?

Generally, are they equivalent in Macroeconomics?

**Tags:** price-level

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## 2 answers

### Answer by username_1 on 2015-05-12. Score: 0 | Accepted answer

Related but not equivalent. I assume you mean *inflation rate* when you say inflation,

Let $p\_t =$ price level at time t

=> inflation rate at time t $ = \frac{p\_{t}-p\_{t-1}}{p\_{t-1}} = \frac{p\_{t}}{p\_{t-1}} -1 $


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### Answer by username_2 on 2015-05-12. Score: 3

Snoram is correct. Price level is a just that, the relative level of prices. Inflation/deflation is the act of moving up/down price levels. The inflation rate is the difference in price levels from one time period to another.

I.E. Year 1: Price level = 100 | Year 2: Price level =105.

There was inflation in the economy (because price level increased). The inflation rate was 5%.

Another example:

I.E. Year 1: Price level = 177

In this example we do NOT know if the economy is experiencing inflation or deflation becuase we only have a single point in time and thus cannot determine the rate or direction of change.


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