GLOSSARY. · GDP chain price index is a measure that compares changes in the prices of all final goods during a given year to the prices of those goods in a base year

· GDP chain price index is a measure that compares changes in the prices of all final goods during a given year to the prices of those goods in a base year.

· The consumer price index (CPI) is the most widely known price-level index. It measures the cost of purchasing a market basket of goods and services by a typical household during a lime period relative to the cost of the same bundle during a base year.

· Inflation is a situation in which a decline in the purchasing power of money results in a rise of the general price level.

· Cost-push inflation is an increase in the general price level resulting from an increase in the cost of production.

· Demand-pull inflation is caused by pressure on prices originating from the buyers' side of the market. In contrast, cost-push inflation is caused by pressure on prices originating from the sellers' Side- of the market.

· Deflation is a decrease in the general level of prices. During the early years of the Great Depression, there was deflation, and the CPI declined at about a double-digit rate.

· Disinflation is a reduction in the inflation rate. Between 1980 and 1986, there was disinflation. This does not mean that prices were falling, but only that the inflation rate fell.

· Hyperinflation is an extremely rapid rise in the general price level.

· Nominal income is income measured in actual money amounts. Measuring your purchasing power requires converting nominal income into real income, which is nominal income adjusted for inflation

· Nominal interest rate is the annual percentage amount of money that is earned on a sum loaned or disposed in a bank.

· The real interest rate is the nominal interest rate adjusted for inflation. If real interest rates are negative, lenders incur losses.