changes in consumer price index -AVG of prices of goods and services purchased by typical family of 4
Consumer Price Index
-measurement of inflation -track state of economy -businesses use it to set prices
4 biases that cause change in CPI
1.) substitution 2.)increase in quantity 3.)new product 4.)outlet
Producer Price Index
-AVG of prices recieved by producers of goods and services at all stages of the production process -Trackes prices of market basket of goods -prices firms recieve for goods and services at all stages of production
Real Vs. Nominal Interest rate
-Real: stated interest rate on a loan; corrects nominal for effect of inflation on purchasing power -Nominal: stated interest rate on a loan
Cost of Inflation
-affects distrubution of income -anticipated inflation -unanticipated inflation
-prices goes up, inflation goes up, nominal interest up
assumption used in economics. where other revelant factors or variabls held constant
suppose war broke out in the middle east... what should we expect in the market for oil?
the market price of oil to rise and the market quantity to fall
inflation can best be described as....
the gradual rise of prices in an economy overtime
suppose a home buyeer purchases a house with a mortgage.. what process can be described as this:
a worker quits his job in Oxford and prepares to take a job acrosss the country in Seattle, but he needs two weeks to move his family from one location to another.. What type of unemployment is this?
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