Macro Chap. 6

For any period, measures the cost in that period of a standard basket of goods and services relative to the cost of the same basket of goods and services in a fixed year, called the base year

The process of dividing a normal quantity by a price index (such as the CPI) to express the quantity in real terms

A situation in which the prices of most goods and services are falling over time so that inflation is negative

The tendency for normal interest rates to be high when inflation is high and low when inflation is low

A situation in which in the inflation rate is extremely high

The practice of increasing a nominal quantity each period by an amount equal to the percentage increase in a specified price index

A financial assets that pays the holder a nominal interest rate equal to the fixed real interest rate plus the actual rate of inflation each year

The annual percentage increase in the nominal value of a financial asset

A quantity that is measured in terms of its current dollar value

A measure of the average price of a given class of goods and services relative to the price of the same goods and services in a base year

A measure of the overall level of prices at a particular point in time as measured by a price index such as the CPI

The annual percentage rate of change in the price level, as measured, for example by the CPI

The annual percentage increase in the purchasing power of the financial asset

A quantity that is measured in physical terms - for example, in terms of quantities of goods and services

The wage paid to workers measured in terms of real purchasing power