Key Concepts and Summary

Key Concepts and Summary

In the U.S. economy, the annual inflation rate in the last two decades has typically been around 2% to 4%. The periods of highest inflation in the United States in the twentieth century occurred during the years after World Wars I and II, and in the 1970s. The period of lowest inflation—actually, with deflation—was the Great Depression of the 1930s.

Glossary

deflation

negative inflation; most prices in the economy are falling

hyperinflation

an outburst of high inflation that is often seen (although not exclusively) when economies shift from a controlled economy to a market-oriented economy