Chapter 6 - Measuring the Cost of Living Flashcards
0
Q
Inflation Rate
A
The inflation rate is the percentage change in the price index from the preceding period.
1
Q
Consumer Price Index (CPI)
A
The consumer price index is a measure of the overall cost of the goods and services bought by a typical consumer.
2
Q
Producer Price Index
A
The producer price index is a measure of the cost of a basket of goods and services bought by firms.
3
Q
Indexation
A
Indexation is the automatic correction by law or contract of a dollar amount for the effects of inflation.
4
Q
Nominal Interest Rate
A
The nominal interest rate is the interest rate as usually reported without a correction for the effects of inflation.
5
Q
Real Interest Rate
A
The real interest rate is the interest rate corrected for the effects of inflation.
