Price level
Definition. The price level is a measure of the average prices of goods and services in an economy at a given time, usually represented by a price index such as the consumer price index. Changes in the general price level over time are used to measure inflation or deflation.
A sustained rise in the general price level is inflation, while a sustained fall is deflation. The price level is plotted on the vertical axis of the aggregate demand and aggregate supply diagram.
This term belongs to Measuring Inflation and the CPI in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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