Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
10 Cards in this Set
- Front
- Back
|
Inflation
|
An increase in the general (average) price level of goods and services in the economy.
|
|
|
Deflation
|
A decrease in the general (average) price level of goods and services in the economy.
|
|
|
Consumer Price Index (CPI)
|
Most widely reported measure of Inflation
|
|
|
CPI =
|
CYP ÷ BYP × 100
|
|
|
Inflation Rate
|
ARI = CPIY (CPI in given year) - CPIPY (CPI in previous year) ÷ CPIPY × 100
|
|
|
Real Income
|
RI = NI ÷ CPI
|
|
|
Real Interest Rate
|
The nominal rate of interest minus the inflation rate.
|
|
|
Wealth Effects
|
People who own assets that decline in value are worse off than
|
|
|
Nominal vs Real income
|
nominal is measured in current dollars
real is the nominal adjusted for inflation-purchasing power |
|
|
Relative vs Average price change
|
Relative price is the price of one good in comparison with the price of other goods
Average price is the price of many goods. |
