Unformatted text preview: ers for the higher level of prices today. To compare Ruth’s salary to those of today’s players, we need to inflate Ruth’s salary to turn 1931 dollars into today’s dollars. A price index determines the size of this inflation correction. 1965 Percent per Year 15 CPI GDP deflator 10 5 1970 1975 1980 1985 1990 1998 1995 Figure 23-2 T WO M EASURES OF I NFLATION . This figure shows the inflation rate—the percentage change in the level of prices—as measured by the GDP deflator and the consumer price index using annual data since 1965. Notice that the two measures of inflation generally move together. S OURCE: U.S. Department of Labor; U.S. Department of Commerce. ”The price may seem a little high, but you have to remember that’s in today’s dollars.”...
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- Spring '10
- Inflation, Consumer price index, GDP deflator, Ruth’s salary