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Indietro

Chapter 9

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Termini in questo insieme (20)

  • What is the inflation rate?

    The inflation rate is the percentage increase in the overall level of prices from one year to the next.

  • What does the Consumer Price Index (CPI) measure?

    The CPI measures the cost of living by comparing the cost of a market basket of goods and services in the current year to the base year.

  • How is the inflation rate calculated using CPI?

    Inflation rate = [(CPI this year – CPI last year) / CPI last year] × 100.

  • What is substitution bias in CPI?

    Substitution bias occurs because CPI assumes consumers buy the same fixed basket, overstating the cost of living when consumers substitute cheaper goods.

  • How do you calculate the real wage?

    Real wage = (Nominal wage / CPI) × 100, which adjusts nominal wages for inflation to reflect purchasing power.

  • What is the GDP deflator?

    The GDP deflator measures the price level by dividing nominal GDP by real GDP, including all final goods and services.

  • What is the Producer Price Index (PPI)?

    The PPI is an average of prices received by producers at all stages of production.

  • What is the Personal Consumption Expenditure Price Index (PCE)?

    The PCE measures the price level of goods and services in GDP from the consumption category and is the Federal Reserve's preferred inflation target.

  • What is the natural rate of unemployment?

    The natural rate is the unemployment rate at full employment, consisting of frictional plus structural unemployment, with no cyclical unemployment.

  • Define frictional unemployment.

    Frictional unemployment is short-term unemployment from the process of matching workers with jobs due to normal labor market turnover.

  • Define structural unemployment.

    Structural unemployment arises from a persistent mismatch between workers' skills and job requirements caused by economic changes.

  • Define cyclical unemployment.

    Cyclical unemployment is caused by downturns in the business cycle or recessions.

  • How is the unemployment rate calculated?

    Unemployment rate = (Number of unemployed / Labor force) × 100, where labor force = employed + unemployed.

  • What are discouraged workers?

    Discouraged workers are people available for work but not actively looking because they believe no jobs are available.

  • What is the employment-population ratio?

    The employment-population ratio is the percentage of the working-age population that has jobs.

  • What is the labor force participation rate?

    The labor force participation rate is the percentage of the working-age population that is in the labor force.

  • How does unanticipated inflation affect lenders and borrowers?

    If actual inflation is higher than expected, borrowers gain and lenders lose; if lower, lenders gain and borrowers lose.

  • What is the relationship between nominal interest rate, real interest rate, and inflation?

    Nominal interest rate = Real interest rate + Inflation rate.

  • What problems does inflation cause?

    Inflation raises the cost of living and nominal incomes, redistributes income between lenders and borrowers, and causes menu costs.

  • What happens during deflation?

    Deflation causes consumers to reduce spending, waiting for lower prices, and increases the real interest rate burden on borrowers.