Module 14 Inflation: An Overview

Until-of-account costs

arise from the way inflation makes money a less reliable unit of measure

Real Income

income divided by the price level

Disinflation

the process of bringing the inflation rate down

Menu Costs

the real costs of changing listed prices

Real Wage

the wage rate divided by the price level

Shoe Leather Costs

the increased costs of transactions caused by inflation

Nominal Interest Rate

the interest rate actually paid for a loan

Real Interest Rate

the nominal interest rate minus the inflation rate

Inflation Rate

the percent change per year in a price index- typically the consumer price index