ECON 100 Lecture Notes - Lecture 8: Money Supply, Root Mean Square, Money Illusion
Document Summary
In ation- an increase in the average level of prices. In ation is measured by changes in a grow any faster than normal. price index. An unexpected increase in the money supply can boost the economy in the short run. As rms and workers come to expect and adjust to the new in ux of money, output will not. In the long run, money is neutral. services bought by a typical american consumer. changes regularly to re ect new and better- quality goods. Consumer price index (cpi)- measures the average price for a basket of goods and. Gdp de ator: ratio of nominal to real gdp multiplied by 100. Producer price indexes (ppi)- measures the average price received by produces. For americans, cpi is the measure of in ation that corresponds most directly to their daily. Real price- price that has bee corrected for in ation. Nal and intermediate goods. economic activity prices of goods over time.