ECO 105 Chapter Notes - Chapter 18: Asset Price Inflation, Aggregate Demand, Producer Price Index
23 May 2016
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Asset price inflation: when prices of assets rise more than their real value. Assets include: gold, houses, artwork, collectibles, land, stocks, bonds, any other items ppl hold as a store of wealth. Asset prices & goods prices don"t always move in tandem & can diverge significantly for long periods of time. One reason economists have not developed a measure of asset price inflation is that it"s difficult to know when increases in asset prices reflect an increase in their real value. The net worth to gdp ration increased substantially in the late 1990s, suggesting that the economy was experiencing asset inflation. Price index: # that summarizes what happens to weighted composite of prices of a selection of goods (often called a market basket of goods) over time. Shows what prices @ a particular time are relative to base yr prices.
