15 Europes Deflation Risk The US is planning to push Europe towards new and more aggressive efforts...

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15 Europe’s Deflation Risk The US is planning to push Europe towards new and more aggressive efforts to boost aggregate demand given a renewed risk of deflation in the eurozone.

Source: Reuters, 12 September 2014 a Explain the process by which deflation occurs.

b How might Europe boost its aggregate demand? Might the boost to aggregate demand create demand-pull inflation?

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