INFLATION
I. Inflation - rise in the general level or prices
II. Measuring Inflation
a.) Inflation Rate - measures the percentage increase in the price level over time
i.) deflation- decline in the general price level
ii.) disinflation - occurs when inflation rate itself declines
b.) Consumer Price Index (CPI) - measures inflation by tracking the yearly price of a fixed basket of goods and services
- indicates changes in the cause of the cost of living & prices
III.) Solving Inflation Problems
a.) Finding inflation rate using market basket data.
current year market basket value - base year market basket value
_________________________________________________ X 100
base yeas market basket value
b.) Finding inflation rate using price index
current year price index - base price index
________________________________ X 100
base year price index
c.) Estimation inflation using rule of 70 - used to calculate the # of years it will take for the price level to double at any given rate years needed to double inflation
70
_________________
annual inflation rate
d.) Determining real wages
nominal wages
_______________ X 100
price level
e.) Finding real interest rate
nominal interest rate - inflation premium
I like how you formatted everything except the formulas they are a bit hard to read or comprehend like that. It is too separated I believe and hard to actually take it in.
ReplyDeleteI enjoyed the inflation post. I will use this information for my own personal use and use them for notes i will study these notes they are very helpful.
ReplyDeleteI really like how everything is layer out and it's easier to understand. Especially the formulas and the terms. Very clear and undestandable.
ReplyDelete