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8 Cards in this Set
- Front
- Back
why CPI isn't the perfect way to measure standard of living
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1.substitution bias
2. introduction of new goods 3. unmeasured quality change |
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Inflation Rate calculation
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CPI2-CPI1/CPI1 x 100
or GDP deflator |
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GDP deflator
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Nominal GDP/Real GDP x 100
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CPI
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consumer price index
Price of current basket/Price of base yr basket x 100 |
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REAL INTEREST RATE
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nominal interest rate - inflation rate
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GDP deflator vs CPI
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GDP only records products produced domestically
CPI are all bought by TYPICAL consumers. CPI basket is FIXED GDP measures "currently produced" GS |
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Indexation
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when an amt is automatically corrected for changes in price level
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productivity
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quantiy of GS produced for each unit of output
determines productivity |