Price of the Most Recent Market Basket in the Particular Year. This year’s CPI – Last year’s CPI. x. x. CPI. =. =. Inflation Rate. 100. 100. Price estimate of the Market Basket in 1982-1984. Last year’s CPI. Inflation. General rise in the price level
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Basket in the Particular Year
This year’s CPI – Last year’s CPI
Price estimate of the Market
Basket in 1982-1984
Last year’s CPIInflation
By the way, the rule of 70 apples to inflation as well as economic growth (or anything else).
Real Income = Nominal Income
Price Index ÷ 100
change in real income
Percentage change in nominal income
Percentage change in
Social Security recipients
Who is unaffected (or even helped) by unanticipated inflation?
Real interest rate = Nominal interest rate – inflation rate.