Economics: Section 3: Module 14 Flashcards
Terms
1
Q
Real Wage
A
the wage rate divided by the price level
2
Q
Real Income
A
income divided by the price level
3
Q
Inflation Rate
A
the percent change per year in a price index - typically the consumer price index
4
Q
Inflation Rate (Formula)
A
Price level in year 2 - Price level in year 1/Price level in year 1 x 100
5
Q
Shoe-Leather Costs
A
the increased costs of transactions caused by inflation
6
Q
Menu Costs
A
the real costs of changing listed prices
7
Q
Unit-of-Account Costs
A
arise from the way inflation makes money a less reliable unit of measurement
8
Q
Nominal Interest Rate
A
the interest rate actually paid for a loan
9
Q
Real Interest Rate
A
the nominal interest rate minus the rate of inflation
10
Q
Disinflation
A
the process of bringing the inflation
