Macro Economics Chapter 07 Key Words Flashcards
Adjustable-rate Mortgage (ARM)
A home loan that adjusts the nominal interest rate to changing rates of inflation.
base year
A year chosen as a reference point for comparison with some earlier or later year.
consumer price index (CPI)
An index that measures changes in the average prices of consumer goods and services.
cost push inflation
An increase in the general price level resulting from an increase in the cost of production.
deflation
A decrease in the general (average) price level of goods and services in the economy.
demand pull inflation
A rise in the general price level resulting from an excess of total spending (demand).
disinflation
A reduction in the rate of inflation.
hyperinflation
An extremely rapid rise in the general price level.
inflation
An increase in the general (average) price level of goods and services in the economy.
nominal income
The actual number of dollars received over a period of time.
nominal interest rate
The actual rate of interest without adjustment for the inflation rate.
real income
The actual number of dollars received (nominal income) adjusted for changes in the CPI.
real interest rate
The nominal rate of interest minus the inflation rate.
wage price spiral
A situation that occurs when increases in nominal wage rates are passed on in higher prices, which, in turn, result in even higher nominal wage rates and prices.
wealth
The value of the stock of assets owned at some point in time.
