Economists use the term Inflation to describe a situation in which the economy's overall price level is rising.

a)Briefly explain how the Consumer Price Index (CPI) is used to measure inflation. (4 marks)

b)Briefly explain why theReserve Bank of Australia targets inflation. (4 marks)

Economists use the term Inflation to describe a situation in which the economy's overall price level is rising. You are required to: a) Briefly explain how the Consumer Price Index (CPI) is used to measure inflation. (4 marks) [Answer here] b) Briefly explain why the Reserve Bank of Australia targets inflation. (4 marks) [Answer here] c) Discuss possible monetary policy decision's the Reserve Bank of Australia would make if inflation rate is expected to be high for a long period of time. (2 marks) [Answer here]