ECON 2010 Lecture Notes - Lecture 6: Deflate, Tax Bracket, Nominal Interest Rate
Document Summary
Prices of goods change over time: adjust values, incomes, or spending for change in prices, constant purchasing power. Baseball salaries: babe ruth earned ,000 in 1930, barry bonds earned . 3 million in 2001. Inflation increases uncertainty when planning for the future. The consumer price index (cpi) is a measure of the cost of living during a particular period. The cpi measures: the cost of a standard basket of goods and services in a given year, relative to the cost of the same basket of goods and services in the base year. 2010 is the base year for the cpi: base year changes periodically. A price index measures the average price of a given quality of goods and services relative to the price of the same goods and services in a base year. Cpi measures the change in consumer prices. Other indices: core inflation is cpi without energy and food, producer price index, import / export price index.
