L2 - Inflation

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ECON112 (Terry Kerr) Flashcards on L2 - Inflation, created by Sophia Lynch on 15/07/2020.
Sophia Lynch
Flashcards by Sophia Lynch, updated more than 1 year ago
Sophia Lynch
Created by Sophia Lynch almost 5 years ago
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Question Answer
The inflation rate is the percentage change in what? The price level.
What does each element in this formula mean? Pt = Price level THIS period
The 'Fisher Effect' describes what? The relationship between the nominal interest rate and the real interest rate.
What does each element in this formula mean?
What are two ways to measure inflation? CPI Index and the GDP Deflator
What are 2 differences between the CPI Index and the GDP Deflator? 1. CPI includes some foreign goods (imports) while GDP Deflator does not 2. CPI basket is fixed (barely changes) but GDP Deflator measures the price of all goods and services currently produced.
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