Limitations of the Consumer Price Index (CPI)

Limitations of the Consumer Price Index (CPI)

The consumer price index (CPI) is a measure of the overall price level of goods and services bought by a typical consumer in a particular economy.¬† Its goal is to measure the cost of living and show the effects of inflation on individual consumers. However, like most indicators, the CPI […]

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What is the Gini Index

What is the Gini Index?

The Gini index (i.e. the Gini coefficient) is a statistical measure of distribution, developed by Corrado Gini in 1912. In an economic context it is commonly used as an index of economic inequality that measures income or wealth distribution among the population. The index ranges from 0 to 1, although […]

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World's Top 10 Economies by Per Capita GDP

The World’s Top 10 Economies by Per Capita GDP

GDP is without a doubt one of the most common measures of economic strength. It is used by economists and policy makers to measure and compare the economic power of countries all around the world (see also Gross Domestic Product). In an earlier article we have created a list of […]

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Difference between Individual and Market Supply

In economics, supply is defined as the quantity of a specific good or service that producers are willing to provide over a given period of time. This definition looks at all producers combined (i.e. aggregate data). However, individual producers may be willing to provide significantly different quantities of any given […]

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The world's top 10 Economies by GDP

The World’s Top 10 Economies by GDP

Gross Domestic Product (i.e. GDP) is one of the most common measures of economic output and strength.¬†Virtually all countries around the world measure and report their GDP on a regular basis. This allows us to directly compare their economic power. Fortunately, the World Bank provides a comprehensive database of economic […]

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The Three Types of Trade Barriers

The Three Types of Trade Barriers

Trade barriers are restrictions on international trade imposed by the government. They are designed to impose additional costs or limits on imports and/or exports in order to protect local industries. These additional costs or increased scarcity result in a higher price of imported products and thereby make local goods and […]

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Differences between GDP Deflator and Consumer Price Index (CPI)

Differences between the GDP Deflator and CPI

To measure changes in the overall price level in an economy, policy makers and economists monitor a number of different economic indicators. The two most important ones are the GDP deflator and the Consumer Price Index (CPI). Even though they usually show similar results, there are two important differences between […]

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How to Calculate the GDP Deflator

The GDP deflator is a measure of the price level of all domestically produced final goods and services in an economy. It is sometimes also referred to as the GDP Price Deflator or the Implicit Price Deflator. The GDP deflator reflects changes in the average price level within the economy. […]

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Nominal Interest Rate vs Real Interest Rate

Nominal Interest Rates vs. Real Interest Rates

Interest rates are a fundamental part of financial economics. They help us evaluate and compare different investments or loans over time. However, if we compare financial data over time, we have to consider the effects of inflation. This is why we distinguish between two different types of interest rates in […]

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Three Types of Unemployment

The Three Types of Unemployment

Unemployment exists in every economy around the world. However, the percentage of workers who are unemployed and the reasons why they were laid off can be very different. Therefore, economists can use unemployment data as an economic indicator to assess the health of an economy. To do this, they differentiate […]

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