ECON 1000 Chapter Notes - Chapter 6: Real Interest Rate, Interest Rate, Nominal Interest Rate
Document Summary
In the example in the table, the year 2013 is the base year. Inflation rate: the percentage change in the price index from the preceding period price level is rising: the inflation rate between two consecutive years is computed as follows: Core inflation: a measure of the underlying trend of inflation. If the quality of a good deteriorates from one year to the next, the value of a dollar falls, even if the price of the good stays the same. Statistics canada adjusts the price of the good to account for the quality change. It is, trying to compute the price of a basket of goods of constant quality: despite these efforts, changes in quality remain a problem because quality is so hard to measure. Supposed that volkswagen raises the price of its cars. Volkswage(cid:374)s are (cid:373)ade i(cid:374) ger(cid:373)a(cid:374)y, the (cid:272)ar is (cid:374)ot part of ca(cid:374)ada"s gdp.