ECO 1102 Lecture Notes - Lecture 4: Gdp Deflator, Nominal Interest Rate, Real Interest Rate

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ECO 1102 Full Course Notes
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ECO 1102 Full Course Notes
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Key terms: consumer price index (cpi) - the overall measure of the cost of the goods and services bought by a typical consumer. Inflation rate - the percentage change in the price index from the preceding period: core inflation - a measure of the underlying trend if inflation. To see how the statistics are structured, a simple economy with two goods is used: hot gods and hamburgers. Economists use the term inflation to describe a situation in which the economy"s overall price level is rising. Inflation rate - the percentage change in the price level from the previous period. Cpi basket: {10 kg beef, 20 kg chicken} The cpi basket cost in 2014, the base year. Cost of cpi basket in 2015 = ( x 10) + ( x 20) = . Cost of cpi basket in 2016 = ( x 10) + ( x 20) = . Cpi in 2016 = 100 x (/) = 175.

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