Defining Macro Variables -- Inflation

# Defining Macro Variables -- Inflation - Econ 1021 Fall 2009...

• Notes
• 15

This preview shows pages 1–6. Sign up to view the full content.

Defining Macro Variables: Inflation Econ 1021 Fall 2009 Outline: 1. Defining Inflation 2. Definition and comparison of various measures of inflation 3. Using price indexes 4. The costs of inflation Reading:    Chapter 5, pp. 111 – 113       from  Macroeconomics in Context

This preview has intentionally blurred sections. Sign up to view the full version.

What is Inflation? Inflation is the rate of change (the growth rate) of the average price level . What is an average price level ? just what it sounds like several ways of “averaging” the GDP Deflator the CPI -- consumer price index the PPI -- producer price index
What is Inflation? “The Deflator” Nominal GDP 2008 = Σ (P i 2008 )(Q i 2008 ) Real GDP 2008 = Σ (P i base year )(Q i 2008 ) The (GDP) Implicit Price Deflator = “The” Average price level = P = nominal GDP / real GDP = all  goods = all  goods

This preview has intentionally blurred sections. Sign up to view the full version.

What is Inflation? The GDP Deflator 2008 2000 GDP, current \$ (billions) 14,441.4 9,817.0 GDP, constant \$ (billions) 13,312.2 9,817.0 Implicit GDP Deflator 108.48 100.0 Source: Over the period 2000 to 2008, the rate of inflation was 8.48%
Other measures of inflation?

This preview has intentionally blurred sections. Sign up to view the full version.

This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern