chap 7 Flashcards
Inflation
increase in the average level of prices, not a change in any specific price
deflation
fall in average prices
relative prices?
price of one good in comparison with the price of other goods
- change in relative price of something (say apples) means that they (apples) have become more
Nominal Income?
amount of money you receive in a particular time period; measured in current dollars
Nominal GDP
GDP from a particular time period
real income?
purchasing power of that money as measured by the quantity of goods and services your dollars will buy
- if income u receive every year doesnt change, nominal price doesnt change but real income will rise or fall with price changes
Money illusion?
use of nominal dollars rather than real dollars to gauge changes in one’s income or wealth
Hyperinflation?
inflation rate in excess of 200%, sating at least one year
Bracket Creep?
movement of taxpayers into higher tax brackets (rates) as nominal income grows
Consumer Price Index?
measure (index) of changes in average price of consumer goods and services
Inflation Rate?
annual percentage rate of increase in the average price level
Item weight?
percentage of total expenditure spent on a specific product; used to compare inflation prices (individually)
Core inflation rate?
changes in the CPI, excluding food and energy prices
GDP deflator?
price index that refers to all goods and services included in GDP
Nominal GDP
value of final output produced in a given period, measured in the prices of that period (current prices)
