ECON 102 Lecture Notes - Lecture 3: Real Interest Rate, Nominal Interest Rate
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ECON 102 Full Course Notes
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Overall measure of the cost of goods and services bought by a typical consumer: used to monitor changes in the cost of living over time. When the consumer price index rises, the typical family has to spend more dollars to maintain some standard of living. Economists use the term in ation to describe a situation in which the economy"s overall price level is rising: in ation rate is the percentage change in the price level from the previous period. Statistics canada computes and reports the cpi monthly: uses data on more than 600 di erent goods and services. Five steps: determine the basket, find the prices. Should be done on a monthly basis (frequent: compute the basket"s costs, choose a base year and compute the index, compute the in ation rate. Unmeasured quality change: comparison between cellphones in the 1980s to the 2000s.