Econ Chap 12 Flashcards
1
Q
Inflation
A
increased level of prices
2
Q
Consumer Price Index (CPI):
A
measures the average price for a basket off goods and services bought by a typical American consumer.
3
Q
Producer Price Index
A
a price that has been corrected for inflation.
4
Q
Velocity of Money
A
the average number of times a dollar is spent on finished goods and services in a year
5
Q
Deflation
A
a decrease in the average prices
6
Q
Money Illiusion
A
when people cannot tell the difference between real and nominal inflation in the economy
7
Q
Real Rate of Return
A
the nominal rate of return minus the inflation rate
8
Q
Nominal Rate of Return
A
the rate of return that does not account for inflation
9
Q
Monetizing the debt
A
when the government pays off its debts by printing money
