ECON 104 Study Guide - Quiz Guide: Producer Price Index, Nominal Interest Rate, Real Interest Rate
Document Summary
Inflation is a general increase in the price level (an increase in our price index) It is not just an increase in prices. No: it was simply higher prices for oil. No: it is simply lower prices for computers. We measure inflation by the use of price indexes (use output index) Operationally, we define inflation as an increase in the price index. Most commonly used price index is the consumer price index (cpi) Put out monthly by the bureau of labor statistics. A couple of other common ones are the producer price index (ppi) and the gdp deflator. Simplifying model = only 2 goods (bread and water) The price of bread is - the price of water is . 5 units of bread are sold - 10 units of water are sold. The price of bread is - the price of water is .
