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VocabularyEdit

Consumer Price Index (CPI)

  • Definition: A measure of the overall cost of the goods and services bought by a typical consumer.
  • What It Means:

Inflation Rate

  • Definition: The percentage change in the price index from the preceding period.
  • What It Means:

Producer Price Index

  • Definition: A measure of the cost of a basket of goods and services bought by firms.
  • What It Means:

Indexation

  • Definition: The automatic correction by law or contract of a dollar amount for the effects of inflation.
  • What It Means:

Nominal Interest Rate

  • Definition: The interest rate as usually reported without a correction for the effects of inflation.
  • What It Means:

Real Interest Rate

  • Definition: The interest rate corrected for the effects of inflation.
  • What It Means:

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