Chapter 24 - Measuring the Cost of Living

Vocabulary
Consumer Price Index (CPI)


 * Definition: A measure of the overall cost of the goods and services bought by a typical consumer.

Inflation Rate
 * What It Means:


 * Definition: The percentage change in the price index from the preceding period.

Producer Price Index
 * What It Means:


 * Definition: A measure of the cost of a basket of goods and services bought by firms.

Indexation
 * What It Means:


 * Definition: The automatic correction by law or contract of a dollar amount for the effects of inflation.

Nominal Interest Rate
 * What It Means:


 * Definition: The interest rate as usually reported without a correction for the effects of inflation.

Real Interest Rate
 * What It Means:


 * Definition: The interest rate corrected for the effects of inflation.


 * What It Means: