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Chapter 06
Brief Principles of Macroeconomics Vocabulary
6
Economics
Undergraduate 2
10/12/2013
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Term
Consumer Price Index (CPI)
 Definition

A measure of the overall cost of the goods and services

brought by a typical consumer

 

 

Price (goods and services) in current year                     

_______________________________         X  100

 

Price in base year                   

Term
Inflation Rate
 Definition
The percentage change in the price index from the preceding period
Term
Producer Price Index
 Definition
A measure of the cost of a basket of goods and the services bought by firms
Term
Indexation
 Definition
The automatic correction by law or contract of a dollar amount for the effects of inflation
Term
Nominal Interest Rate
 Definition

The interest rate as usually reported

without a correction for the effects of inflation
Term
Real Interest Rate
 Definition
The interest rate corrected for the effects of inflation
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