Wall Street traders looked past mixed economic data, sending stocks and bonds higher before an inflation reading that will help define the Federal Reserve’s next
Define inflation and deflation, explain how their rates are determined, and articulate why price-level changes matter
1
The price level is a certain average of the prices of a broadly defined group of commodities
A price level is the average of current prices across the range of goods and services produced in the economy
The fiscal theory of the price level (FTPL) describes fiscal and monetary policy rules such that the price level is determined by government debt and fiscal policy alone, with monetary policy playing at best an indirect role
Thus, money has been neutral, the final behaviour of people unchanged, and the price level is higher
level: [noun] a device for establishing a horizontal line or plane by means of a bubble in a liquid that shows adjustment to the horizontal by movement to the center of a slightly bowed glass tube
Prices help determine how to produce goods
Price By Volume Chart - PBV: A horizontal histogram plotted on the chart of a security, which corresponds to the volume of shares traded at a specific price level
Core rate of inflation
Price level-adjusted mortgages, often referred to as PLAMs, are mortgages with payments that vary due to a fixed interest rate and an adjustable principal balance
It is calculated as the relationship or quotient between two price levels and is usually expressed in percentage terms
The inflation rate is the change in average price levels in a given time period