{"id":3910,"date":"2015-12-04T15:34:50","date_gmt":"2015-12-04T15:34:50","guid":{"rendered":"https:\/\/courses.candelalearning.com\/macroxwaymakerxspring2016\/?post_type=chapter&p=3910"},"modified":"2016-07-19T17:27:15","modified_gmt":"2016-07-19T17:27:15","slug":"glossary-inflation-and-price-indexes","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-hccc-macroeconomics\/chapter\/glossary-inflation-and-price-indexes\/","title":{"raw":"Glossary: Inflation and Price Indexes","rendered":"Glossary: Inflation and Price Indexes"},"content":{"raw":"adjustable-rate mortgage (ARM)<\/strong> a loan used to purchase a home in which the interest rate varies with market interest rates\r\n

base year<\/strong> arbitrary year whose value as an index number is defined as 100; inflation from the base year to other years can easily be seen by comparing the index number in the other year to the index number in the base year\u2014for example, 100; so, if the index number for a year is 105, then there has been exactly 5% inflation between that year and the base year<\/p>\r\n

basket of goods and services<\/strong> a hypothetical group of different items, with specified quantities of each one meant to represent a \u201ctypical\u201d set of consumer purchases, used as a basis for calculating how the price level changes over time<\/p>\r\nbusiness cycle <\/strong>the relatively short-term movement of the economy in and out of recession\r\n\r\ncost-of-living adjustments (COLAs)<\/strong> a contractual provision that wage increases will keep up with inflation\r\n\r\nindexed<\/strong> a price, wage, or interest rate is adjusted automatically for inflation\r\n

Consumer Price Index (CPI) <\/strong>a measure of inflation calculated by U.S. government statisticians based on the price level from a fixed basket of goods and services that represents the purchases of the average consumer<\/p>\r\n

core inflation index<\/strong> a measure of inflation typically calculated by taking the CPI and excluding volatile economic variables such as food and energy prices to better measure the underlying and persistent trend in long-term prices<\/p>\r\ndeflation<\/strong> negative inflation; most prices in the economy are falling\r\n\r\ndepression <\/strong>an especially lengthy and deep decline in output\r\n\r\nEmployment Cost Index<\/strong> a measure of inflation based on wages paid in the labor market\r\n\r\nGDP deflator<\/strong> a measure of inflation based on the prices of all the components of GDP\r\n

hyperinflation<\/strong> an outburst of high inflation that is often seen (although not exclusively) when economies shift from a controlled economy to a market-oriented economy<\/p>\r\n

index number<\/strong> a unit-free number derived from the price level over a number of years, which makes computing inflation rates easier, since the index number has values around 100<\/p>\r\ninflation<\/strong> a general and ongoing rise in the level of prices in an economy\r\n\r\nInternational Price Index<\/strong> a measure of inflation based on the prices of merchandise that is exported or imported\r\n\r\nnominal value<\/strong> the economic statistic actually announced at that time, not adjusted for inflation; contrast with real value\r\n\r\npeak <\/strong>during the business cycle, the highest point of output before a recession begins\r\n\r\nProducer Price Index (PPI)<\/strong> a measure of inflation based on prices paid for supplies and inputs by producers of goods and services\r\n

quality\/new goods bias<\/strong> inflation calculated using a fixed basket of goods over time tends to overstate the true rise in cost of living, because it does not take into account improvements in the quality of existing goods or the invention of new goods<\/p>\r\nreal value<\/strong> an economic statistic after it has been adjusted for inflation; contrast with nominal value\r\n\r\nrecession <\/strong>a significant decline in national output\r\n

substitution bias<\/strong> an inflation rate calculated using a fixed basket of goods over time tends to overstate the true rise in the cost of living, because it does not take into account that the person can substitute away from goods whose prices rise by a lot<\/p>\r\ntrough <\/strong>during the business cycle, the lowest point of output in a recession, before a recovery begins\r\n\r\n \r\n","rendered":"

adjustable-rate mortgage (ARM)<\/strong> a loan used to purchase a home in which the interest rate varies with market interest rates<\/p>\n

base year<\/strong> arbitrary year whose value as an index number is defined as 100; inflation from the base year to other years can easily be seen by comparing the index number in the other year to the index number in the base year\u2014for example, 100; so, if the index number for a year is 105, then there has been exactly 5% inflation between that year and the base year<\/p>\n

basket of goods and services<\/strong> a hypothetical group of different items, with specified quantities of each one meant to represent a \u201ctypical\u201d set of consumer purchases, used as a basis for calculating how the price level changes over time<\/p>\n

business cycle <\/strong>the relatively short-term movement of the economy in and out of recession<\/p>\n

cost-of-living adjustments (COLAs)<\/strong> a contractual provision that wage increases will keep up with inflation<\/p>\n

indexed<\/strong> a price, wage, or interest rate is adjusted automatically for inflation<\/p>\n

Consumer Price Index (CPI) <\/strong>a measure of inflation calculated by U.S. government statisticians based on the price level from a fixed basket of goods and services that represents the purchases of the average consumer<\/p>\n

core inflation index<\/strong> a measure of inflation typically calculated by taking the CPI and excluding volatile economic variables such as food and energy prices to better measure the underlying and persistent trend in long-term prices<\/p>\n

deflation<\/strong> negative inflation; most prices in the economy are falling<\/p>\n

depression <\/strong>an especially lengthy and deep decline in output<\/p>\n

Employment Cost Index<\/strong> a measure of inflation based on wages paid in the labor market<\/p>\n

GDP deflator<\/strong> a measure of inflation based on the prices of all the components of GDP<\/p>\n

hyperinflation<\/strong> an outburst of high inflation that is often seen (although not exclusively) when economies shift from a controlled economy to a market-oriented economy<\/p>\n

index number<\/strong> a unit-free number derived from the price level over a number of years, which makes computing inflation rates easier, since the index number has values around 100<\/p>\n

inflation<\/strong> a general and ongoing rise in the level of prices in an economy<\/p>\n

International Price Index<\/strong> a measure of inflation based on the prices of merchandise that is exported or imported<\/p>\n

nominal value<\/strong> the economic statistic actually announced at that time, not adjusted for inflation; contrast with real value<\/p>\n

peak <\/strong>during the business cycle, the highest point of output before a recession begins<\/p>\n

Producer Price Index (PPI)<\/strong> a measure of inflation based on prices paid for supplies and inputs by producers of goods and services<\/p>\n

quality\/new goods bias<\/strong> inflation calculated using a fixed basket of goods over time tends to overstate the true rise in cost of living, because it does not take into account improvements in the quality of existing goods or the invention of new goods<\/p>\n

real value<\/strong> an economic statistic after it has been adjusted for inflation; contrast with nominal value<\/p>\n

recession <\/strong>a significant decline in national output<\/p>\n

substitution bias<\/strong> an inflation rate calculated using a fixed basket of goods over time tends to overstate the true rise in the cost of living, because it does not take into account that the person can substitute away from goods whose prices rise by a lot<\/p>\n

trough <\/strong>during the business cycle, the lowest point of output in a recession, before a recovery begins<\/p>\n

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