Growth + Inflation Flashcards
GDP per capita
a countries economic output proportionate to its population:
GDP divided by population
factors of production
- land
- labor
- capital
Capital
privately owned means of production
purchasing power
the amount of physical goods and services that can be bought by a given amount of money
Bubbles
a market phenomenon that is characterized by surges in asset prices to levels significantly above the value of that asset
how is the Consumer Price Index calculated?
economists calculate the consumer basket for multiple different years
every year’s basket cost is divided by a BASE YEAR’s basket cost and then multiplied by 100
Consumer Price Index
a statistical estimate constructed using the prices of a sample of representative items, which are collected periodically
the most commonly used measure of inflation
“real”
adjusted for inflation
“nominal”
hasnt been adjusted for inflation
CPI consistency shouldnt account for
new or improved products
Demand Pull Inflation
an increase in purchasing power and money bids up the price of goods
Supply Shock
the decrease of an important productive resource
Cost Push Inflation
a supply shock makes scarce resources cost more to make up for high production cost
inflation is generally the result of
having more money than goods and services (money increase or supply decrease)
speculation
the risky trading of finance in expectation of significant returns
