Nominal and Effective Interest rates ieu名义和实际利率内外加厚.tr.pptVIP

L11: Measure of Inflation ECON 320 Engineering Economics Mahmut Ali GOKCE Industrial Systems Engineering Computer Sciences Chapter 4Equivalence Calculations Under Inflation Measure of Inflation Actual versus Constant Dollars Equivalence Calculations under Inflation All-Time Top 10 Movies Inflation Terminology - I Selected Price Indexes * .tr * .tr Inflation and Economic Analysis What is inflation? How do we measure inflation? How do we incorporate the effect of inflation in equivalence calculation? What is Inflation? Value of Money Earning Power Purchasing Power Earning Power Purchasing power Investment Opportunity Decrease in purchasing power (inflation) Increase in Purchasing Power (deflation) Purchasing Power 1990 $100 1990 2003 $100 You could buy 50 Big Macs in year 1990. You can only buy 40 Big Macs in year 2003. $2.00 / unit $2.50 / unit 25% Price change due to inflation The $100 in year 2003 has only $80 worth purchasing power of 1990 -2 -1 0 1 $100 -2 -1 0 1 $100 You could purchase 63.69 gallons of unleaded gas a year ago. You can now purchase 80 gallons of unleaded gas. $1.57 / gallon $1.25 / gallon Price change due to deflation 20.38% Producer Price Index: a statistical measure of industrial price change, compiled monthly by the BLS, U.S. Department of Labor Consumer Price Index: a statistical measure of change, over time, of the prices of goods and services in major expenditure groups—such as food, housing, apparel, transportation, and medical care—typically purchased by urban consumers Average Inflation Rate (f): a single rate that accounts for the effect of varying yearly inflation rates over a period of several years. General Inflation Rate (f ): the average inflation rate calculated based on the CPI for all items in the m