ECON 162 11 9 15 GDP Price Deflator Comprehensive Flexible Weight Price Index No Substitution Bias Not Used for COLAS BEA Quarterly Lower Estimate of Inflation Consumer Price Index Selective Fixed Weight Price Index Substitution Bias Higher Estimate of Inflation Used for COLAS BCS Monthly COLAS Cost of Living Adjustments 3 Final Problems on Midterm 1 Nominal and Real GDP 2 NIPA 3 Purchasing Power Parity Theory Types of Price Changes 1 Creeping Inflation 2 Hyperinflation 3 Deflation 4 Disinflation a Slow steady increases in the price level over time a Extremely high rates of inflation a A sustained decrease in the average level of prices over time a A decrease in the rate of inflation Causes of Inflation See Notebook for Models Costs of Inflation Costs of Anticipated Inflation 1 Menu Costs 2 Shoe Leather Costs a Costs of physically changing prices a Costs of resources devoted to keeping ahead of price changes 3 More Uncertainty About Future Profits Costs of Unanticipated Inflation 1 Harms Savers 2 Harms Lenders 3 Harms Those on Fixed Incomes 4 Harms Payees of Fixed Priced Contracts Nominal Interest Rate i Stared Interest Rate Real Interest Rate r Inflation Rate As an approximation i r Takes Into Account The Effects of Inflation on the Purchasing Power of Future Payments
View Full Document
Unlocking...