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Lecture

ECON 0110 Lecture Notes - Aggregate Demand, Social Security, Alan Greenspan

15 pages39 viewsSpring 2012

Department
Economics
Course Code
ECON 0110
Professor
K E N K E L

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SECTION 14:
INFLATION
A sustained increase in the average level of prices
Not an increase in price of a single specific item
TWO MAIN PRICE INDEXES
CONSUMER PRICE INDEX (CPI)
Based on prices of things consumers buy
Includes used goods
Includes imports
Does not include raw materials (steel, aluminum, oil, wheat, etc.)
Good indicator of changes in cost of living for consumers
GDP DEFLATOR
Includes prices of all new goods and services produced in the U.S.
Includes prices of raw materials
Does not include prices of used goods or imports
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