Understanding Inflation and Its Measurement

Flashcards covering key concepts about inflation, its measurement methods, and related economic indicators.

Inflation

A measure of the rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Consumer Price Index (CPI)

An economic indicator measuring the average price of a market basket of goods and services purchased by urban consumers.

Personal Consumption Expenditures (PCE)

A measure of price changes in consumer goods and services that includes prices in both urban and rural areas.

Core Inflation

An inflation measure that excludes certain items that face volatile price movement, typically food and energy prices.

Market Basket

A collection of goods and services used to track price changes in the consumer market over time.

Weighting Categories

The process of assigning importance to different categories in statistical measures to better represent key components.

Sticky Prices

Prices that remain unchanged despite fluctuations in supply and demand conditions.

Economic Indicator

A statistic about economic activities that gives insights into the economic performance and trends of a country.