Price Level

Price level refers to the average of current prices across goods and services in an economy at a specific time. It indicates whether prices are generally high, low, or stable compared to other periods. When the price level rises, it's called inflation, meaning goods and services cost more overall. Conversely, if prices fall, it's deflation, meaning things are generally cheaper. The price level helps policymakers, businesses, and consumers understand the purchasing power of money and the overall economic condition, acting as a snapshot of how much things cost in the economy at a given moment.