Chapter 19

Question 1

Consumer Price Index (CPI)

Answer 1

An index of the cost, through time, of a market basket of goods purchased by a typical household

Question 2

Deflation

Answer 2

A decrease in the price level from one period to the next

Question 3

GDP Price Index

Answer 3

An index of the price level for all final goods and services included in GDP

Question 4

Index

Answer 4

A series of numbers used to track a variable’s rise or fall over time

Question 5

Indexed Payment

Answer 5

A payment that is periodically adjusted in proportion with a price index

Question 6

Inflation Rate

Answer 6

The percentage change in the price level from one period to the next

Question 7

Nominal Interest Rate

Answer 7

The annual percent increase in a lender’s dollars from making a loan

Question 8

Price Level

Answer 8

The average level of prices in the economy

Question 9

Real Interest Rate

Answer 9

The annual percent increase in a lenders purchasing power from making a loan