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Details Title: Macro Description: Chap. 6 Total Flash Cards: 16 Created: 07/11/2006 21:40:56	To study from this set of flash cards, or to create your own your own study flash cards, register HERE. If you are already a registered user, CLICK HERE.
Cards Term consumer price index (CPI) Definition 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 Term deflating (a normal quantity) Definition the process of dividing a normal quantity by a price index (such as the CPI) to express the quantity in real terms Term deflation Definition a situation in which the prices of most goods and services are falling over time so that inflation is negative Term fisher effect Definition the tendency for normal interest rates to be high when inflation is high and low when inflation is low Term hyperinflation Definition a situation in which in the inflation rate is extremely high Term indexing Definition the practice of increasing a nominal quantity each period by an amount equal to the percentage increase in a specified price index Term inflation-protected bonds Definition 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 Term nominal interest rate Definition the annual percentage increase in the nominal value of a financial asset Term nominal quantity Definition a quantity that is measured in terms of its current dollar value Term price index Definition 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 Term price level Definition a measure of the overall level of prices at a particular point in time as measured by a price index such as the CPI Term rate of inflation Definition the annual percentage rate of change in the price level, as measured, for example by the CPI Term real interest rate Definition the annual percentage increase in the purchasing power of the financial asset Term real quantity Definition a quantity that is measured in physical terms - for example, in terms of quantities of goods and services Term real wage Definition the wage paid to workers measured in terms of real purchasing power Term relative price Definition the price of a specific goods and services in comparison to the prices of other goods and services