PBL-Fiscal and Monetary Policy - President's Dilemma
Economic indicators
Economic indicators - GDP, CPI and unemployment rate Two-minute economic lessons What is an economic indicator - dejargoned Consumer Price Index What is the Consumer Price Index? FAQs about the CPI (for your reference - if you wanted to know additional information) The Discount Rate The interest rate charged to financial institutions when they borrow money from the Federal Reserve's discount window lending facility. The discount window allows banks to borrow money for very short term operating needs. These loans are typically extended for 24 hours or less. Discount rate is one of the Fed's three monetary policy tools. The other two are (1) reserve requirements (2) open market operations |
Nominal v. Real
The main difference between nominal and real values is that real values are adjusted for inflation, while nominal values are not. As a result, nominal GDP will often appear higher than real GDP. Nominal values of GDP (or other income measures) from different time periods can differ due to changes in quantities of goods and services and/or changes in general price levels. As a result, taking price levels (or inflation) into account is necessary when determining if we are really better or worse off when making comparisons between different time periods. Values for real GDP are adjusted for differences in prices levels, while figures for nominal GDP are not. Remember our example of movies adjusted and unadjusted for inflation: http://www.boxofficemojo.com/alltime/adjusted.htm Unemployment Measuring unemployment |