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ECON 102 BIG QUESTIANO BANK OF KNOWLEDGE > WEEK 14 > Flashcards

WEEK 14 Flashcards

1
Q

What is CPI

A

The measure of the cost of living during a period

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2
Q

What does cpi measure to get its statistic

A

A standard basket of goods and services in a given year

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3
Q

Formula for cpi

A

CPI = current year / base year

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4
Q

CPI is always above what

A

ONE —– 1

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5
Q

CPI measures the change in what

A

Consumer prices

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6
Q

How to work out the rate of inflation

A

(Current year - base year) / Base year

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7
Q

what is a nominal quantity

A

When things are measured in terms of its current value

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8
Q

How to find real income

A

Nominal income / CPI

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9
Q

How to find real wage

A

Average wage / cpi

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10
Q

If wages are going up by a real % each year how do you find the wage

A

Times it by the raise %, then times it by CPI

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11
Q

When is there a tight labour market

A

Low level of unemployment and high level of job vacancies

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12
Q

What is CPI’s largest bias

A

Measures price change - Not quality change

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13
Q

What is the substitution bias in CPI

A

Customers are switching products to make it cheaper.

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14
Q

What is the GDP price deflator formula

A

(Nominal GDP / Real GDP) x 100

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15
Q

What does the GDP price deflator do

A

Measures the changes in prices for all of the goods and services produced in an economy

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16
Q

What is a price level

A

Measure of the overall level of prices at a point

17
Q

What is relative prices

A

The price of a specific good or service in comparison to other goods - If inflation is 2% and bulbs raise by 1% then theres a relative decrease

18
Q

What can relative prices do

A

Change markedly without changes in inflation

19
Q

Products with high relative prices

A

Gas
Cruises
Holidays

20
Q

Unexpected inflation does what

A

Redistributes wealth

21
Q

What are menu prices

A

The costs of adjusting prices

22
Q

What is the fisher equation finding

A

Real interest rate

23
Q

What is the fisher equation

A

Real interest rate = nominal interest rate - inflation

24
Q

What is the real interest rate

A

The annual percentage increase in the purchasing power of financial assets

25
Q

Who does unexpected inflation help

A

Borrowers and hurts lenders

26
Q

What are inflation-protected bonds

A

Pay a real rate of interest plus the inflation rate

27
Q

What is the fisher effect

A

The tendency for nominal interest rates to be high when inflation is high and low when inflation is low

28
Q

When gov increases spending what tends to happen

A

Increases demand for goods and servies

29
Q
A

ECON 102 BIG QUESTIANO BANK OF KNOWLEDGE (9 decks)

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