Macroeconomics: Chapter 6 2nd Half
Macroeconomics: Chapter 6 2nd Half eco 105
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This 2 page Class Notes was uploaded by Daniel Hong on Sunday October 18, 2015. The Class Notes belongs to eco 105 at Pace University taught by Mark Weinstock in Fall 2015. Since its upload, it has received 66 views. For similar materials see Principles of Economics: Macroeconomics in Economcs at Pace University.
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Date Created: 10/18/15
Chapter 6 Consumer PriceIndex a price index that measures the cost of a fixed basket of goods chosen to represent the consumption pattern of a typical consumer o The CPI index for a given year say year K is defined as o CPI in year K cost of basket in year Kcost of basket in base year x 100 0 They figure out how much the average person spends Do you spend more of your income on clothing or on rent It is calculated every month It tells you average how price is changing 0 They don t change the weights frequently Biggest problem of CPI o PCE Personal Consumption Expenditure o PPI Producers Price Index In ation is the percentage increase in the price level The percentage rate of change in the price level In ation rate percentage rate of change of a price index Always refer in ation by percentage If the economy is growing you should look at Real GDP Income the ow of money that you receive over time Being grump or grouchy may lead to bad decisions because the brain does not receive enough energy You cannot conceal how you re doing nancially according to law Costofliving adjustments COLAs automatic increases in wages or other payments that are tied to the CPI Total everything Core everything minus two things all energy and food prices removed 0 Food 0 Oil natural gas diesel energy prices Headline always says total About 1400 per year saved of a family of four when gas prices went down Bias means error It s hard to measure technology De ation When the in ation rate is negative below zero Not enough spending Hyperin ation When the in ation rate goes double digit no real definition Disin ation When in ation is still above zero when in ation is going down US gold is in Fort Knox Europe s in ation level is lower than the US Anticipated In ation In ation that is expected In ation bene ts the borrower Much harder to pay off your debt with de ation Unanticipated In ation In ation that is not expected