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ECN 221 Ch 16
Measuring the Cost of Living
Question | Answer |
---|---|
consumer index price (CPI) | a measure of the overall cost of the goods and services bought by a typical customer |
CPI calculation | CPI=price of goods and services/price of basket in base year*100 |
inflation rate | the percentage change in the price index from the preceding period |
producer price index | a measure of the cost of a basket of goods and services bought by firms |
indexation | the automatic correction of a dollar amount for the effects of inflation by law or contract |
nominal interest rate | the interest rate as usually reported without a correction for the effects of inflation |
real interest rate | the interest rate corrected for the effects of inflation |