Ch. 8 Vocab
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Last updated 1:27 AM on 9/27/22
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12 Terms
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deflation
occurs when overall prices fall
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Consumer Price Index (CPI)
a measure of the price level based on the consumption patterns of a typical consumer
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Chained CPI
a measure of the consumer price index in which the typical consumer's "basket" of goods and services considered is updated monthly
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shoe-leather costs
the resources that are wasted when people change their behavior to avoid holding money
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money illusion
occurs when people interpret nominal changes in wages or prices as real changes
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nominal wage
a worker's wage expressed in current dollars
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real wage
the nominal wage adjusted for changes in the price level
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menu costs
the costs of changing prices
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output
the product the firm creates
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capital gain taxes
taxes on the gains realized by selling an asset for more than its purchase price
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Equation of Exchange
specifies the long-run relationship between the money supply, the price level, real GDP, and the velocity of money
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velocity of money
the number of times a unit of money exchanges hands in a given year
Note 
Flashcards (133)