ECON 100, Principles of Economics - Macro :–
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Practice questions for this set
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Wages go up to keep up with increases in inflations, but this moves people into
higher tax brackets without an increase in real wage.
Choose an answer
1 CPI (Consumer Price Index) - Definition 2 Shoe Leather Costs
3 Distortions of the Tax System 4 Inflation Rate Formula
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Terms in this set (87)
, CPI (Consumer Price Index) - Definition The cost of a standard basket of goods and services in a
certain year relative to the cost of a basket of goods
and services in a fixed year (called the base year)
CPI (Consumer Price Index) - Formula
Difference Between GDP Deflator and GDP deflator reflects the prices of all goods and
CPI services PRODUCED DOMESTICALLY whereas the CPI
reflects the prices of all goods and services BOUGHT
BY CONSUMERS
CPI Basket Components Food/Beverages, Housing (largest), Apparel,
Transportation, Medical Care, Recreation, Education,
Other Goods and Services
Inflation Rate Formula (Current year CPI ) - (Earlier Year CPI) / (Earlier Year CPI)
x100
Deflation a decrease in the general level of prices
Indexing the practice of increasing a nominal quantity each
period by an amount equal to the percentage increase
in a specified price index. Indexing prevents the
purchasing power of the nominal quantity from being
eroded by inflation
Nominal Quantity a quantity that is measured in terms of its current dollar
value
Real Quantity a quantity that is measured in physical terms
Substitution Bias consumers may change their purchasing habits away
from goods that have increased in price
Questions & Answers
Add to calendar
Play your way to mastery with fun games
Match Blocks Charms NEW
Practice questions for this set
Learn 1/6 Study with Learn
Wages go up to keep up with increases in inflations, but this moves people into
higher tax brackets without an increase in real wage.
Choose an answer
1 CPI (Consumer Price Index) - Definition 2 Shoe Leather Costs
3 Distortions of the Tax System 4 Inflation Rate Formula
Don't know?
Terms in this set (87)
, CPI (Consumer Price Index) - Definition The cost of a standard basket of goods and services in a
certain year relative to the cost of a basket of goods
and services in a fixed year (called the base year)
CPI (Consumer Price Index) - Formula
Difference Between GDP Deflator and GDP deflator reflects the prices of all goods and
CPI services PRODUCED DOMESTICALLY whereas the CPI
reflects the prices of all goods and services BOUGHT
BY CONSUMERS
CPI Basket Components Food/Beverages, Housing (largest), Apparel,
Transportation, Medical Care, Recreation, Education,
Other Goods and Services
Inflation Rate Formula (Current year CPI ) - (Earlier Year CPI) / (Earlier Year CPI)
x100
Deflation a decrease in the general level of prices
Indexing the practice of increasing a nominal quantity each
period by an amount equal to the percentage increase
in a specified price index. Indexing prevents the
purchasing power of the nominal quantity from being
eroded by inflation
Nominal Quantity a quantity that is measured in terms of its current dollar
value
Real Quantity a quantity that is measured in physical terms
Substitution Bias consumers may change their purchasing habits away
from goods that have increased in price
