Chap 24 Macroeconomics

Consumer Price Index (CPI)
- measure of overall cost of goods and services bought by a typical consumer
- price of basket of goods and services in current year
- price of basket in base year
- X 100
Inflation Rate
- percentage change in price index from preceding period
- inflation rate in year 2 = CPI year 2-CPI year 1
- CPI year 1
- x 100
Producer Price Index

measure of cost of basket of goods and services bought by firms
Indexation
- automatic correction by law or contract of a dollar amount for the effects of inflation
- amount in todays dollars = amount in year T dollars x price level today
- price level in year T
Nominal Interest Rate

interest rate as usually reported without a correction for the effects of inflation
Real Interest Rate

interest rate corrected for the effects of inflation

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amgallegos

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Card Set

Chap 24 Macroeconomics

Description

Chapter 24 Vocab

Updated

2012-01-29T20:40:04Z

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