Macro CPI 8.28

Price Index

A measure that tracks the cost of a market basket over time, relative to a base year.

Q: What is the Consumer Price Index (CPI)?

A: A measure of the cost of goods and services bought by a typical urban household.

Q: What is a Market Basket?

A: A fixed list of goods and services used to track prices for inflation calculations.

Q: What is the Inflation Rate?

A: The yearly percentage change in a price index, usually the CPI.

Q: What is Deflation?

A: A decrease in the overall price level; negative inflation.

Q: What is Disinflation?

A: A reduction in the rate of inflation; prices are still rising, but more slowly. Disinflation occurs when the inflation rate decreases over time, leading to a slowdown in price increases.

Q: What is Stagflation?

A: A period of slow economic growth and high unemployment combined with high inflation.

Q: What is the Producer Price Index (PPI)?

A: A price index that measures the cost of goods bought by producers.

Q: What is the GDP Deflator?

A: A price index = (Nominal GDP / Real GDP) × 100; measures overall price level.

Q: What are Chained Dollars?

A: A method that uses multiple base years to adjust real GDP for inflation more accurately.

Q: What types of goods are included in GDP?

A: New construction, final goods/services, inventory changes, and domestic production.

Q: What types of goods are excluded from GDP?

A: Used goods, intermediate goods, financial assets like stocks and bonds, and imports.