ECO 1002: Introduction to Macroeconomics - Inflation

This set of flashcards covers key concepts and measures related to inflation in macroeconomics as discussed in the ECO 1002 lecture.

Inflation is a sustained rise in __ levels.

overall price

A worker’s __ wage is relatively sticky, whereas prices adjust quickly.

NOMINAL

The main measure for cost of living is the __.

Consumer Price Index (CPI)

The Bureau of Labor Statistics consults the Consumer Expenditure Survey to compile the __ for the CPI.

basket of consumption goods

In measuring CPI, the price of the basket is normalized to be __ in the baseline years.

100

The CPI calculation for the annual inflation rate is given by the formula: __.

(CPITODAY - CPILAST YEAR) / CPILAST YEAR × 100%

Core CPI removes and prices because they are the most volatile.

food; energy

The GDP deflator converts __ GDP into real GDP.

nominal

Inflation can lead to a redistribution of __ power.

purchasing

Ex-ante Real Interest Rate is calculated as E(RIR) = NIR - E(π), where NIR is the __ interest rate.

nominal