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Unformatted text preview: XPI VS GDP deflator 1. CPI- goods and services bought by typical consumers. GDP deflator - reflects prices of all goods and services produced domestically 2. CPI - prices changes, quantities stay fixed GDP deflator - quantity change, price stay fixed Nominal interest rates: interest rate without correction for inflation- measures the increase in the number of dollars in your bank account. Real interest rate: interested rate with correction for onflation- measures the increase in the purchasing power of the dollars in your saving account Real interste rate . ....
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- Winter '08