From the Congressional Glossary – Including Legislative and Budget Terms
Deflation / Inflation / Real Dollar
Deflation: A sustained decrease in the general price level.
Deflator: An index used to adjust a current dollar amount to its real dollar counterpart, that is, to remove the effects of inflation.
Inflation: A rise in the general price level. The overall general upward price movement of goods and services in an economy.
Economists use the term “inflation” to denote an ongoing rise in the general level of prices quoted in units of money. The magnitude of inflation–the inflation rate–is usually reported as the annualized percentage growth of some broad index of money prices. With U.S. dollar prices rising, a one-dollar bill buys less each year. Inflation thus means an ongoing fall in the overall purchasing power of the monetary unit. Inflation rates vary from year to year and from currency to currency.
“Inflation,” by Lawrence White, The Concise Encyclopedia of Economics
Inflator: An index used to express a current dollar amount in prices of another period.
Business Cycles Explained: Monetarist Theory
Real Dollar (constant dollar): A dollar value adjusted to remove the effects of inflation by dividing the nominal value (also called the current dollar value) by the appropriate price index. The resulting amount can be labeled real or inflation adjusted. Real dollar values can reflect a measure of purchasing power, such as real income, or a measure of quantity, such as real GDP. Real dollar is frequently called constant dollar when referring to measures of purchasing power. See the CPI inflation calculator.
Is the Cost of Living Really Rising?
The Consumer Price Index (CPI) program produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. There are separate indexes for two groups or populations of consumers:
- The CPI for All Urban Consumers (CPI-U) is the index most often reported by the national media.
- The CPI for Urban Wage Earners and Clerical Workers (CPI-W) is the index most often used for wage escalation agreements.
The CPI inflation calculator allows customers to calculate the value of current dollars in an earlier period, or to calculate the current value of dollar amounts from years ago.
CPI Chart 2018, by Mark Perry, AEI
Consumer price indexes often are used to escalate or adjust payments for rents, wages, alimony, child support and other obligations that may be affected by changes in the cost of living. There is a fact sheet explaining how to use the CPI for escalating contracts.
Overview of BLS Statistics on Inflation and Prices
Why Not Print More Money?
Also see Federal Debt; Budget Control Act of 2011; Other Peoples Money (OPM); § Ch. 7 Legislating in Congress: Federal Budget Process, in Congressional Deskbook.
Price Floors: The Minimum Wage (MRU)
More
- Deflation – investopedia
- Deflation – Wikipedia
- Inflation – investopedia
- Inflation – Wikipedia
- Consumer Price Index (CPI) – Bureau of Labor Statistics
- CPI inflation calculator – Bureau of Labor Statistics
- “The Costs of Inflation and Disinflation,” by Kevin Dowd, Cato Journal, Fall 1994
- “Inflation: Core vs. Headline,” CRS Report RS22705 (11-page PDF
) - “Inflation: Causes, Costs, and Current Status,” CRS Report RL30344 (20-page PDF)
- “The Depreciating Dollar: Economic Effects and Policy Response,” CRS Report RL34582 (29-page PDF)
- “Inflation and the Real Minimum Wage: Fact Sheet,” CRS Report RS20040 (3-page PDF)
- “The Federal Minimum Wage: In Brief,” CRS Report R43089 (15-page PDF)
- “The 2007-2009 Recession: Similarities to and Differences from the Past,” CRS Report R40198 (15-page PDF)
- “Consumers and Food Price Inflation,” CRS Report R40545 (44-page PDF)
- “Indexing Capital Gains Taxes for Inflation,” CRS Report R45229 (29-page PDF)
- “Monetary Policy and the Federal Reserve: Current Policy and Conditions,” CRS Report RL30354 (27-page PDF)
- “Slow Growth in the Current U.S. Economic Expansion,” CRS Report R44543 (33-page PDF)
- “Deflation: Economic Significance, Current Risk, and Policy Responses,” CRS Report R40512 (23-page PDF)
- “Price Deflation and Zero Interest Rates: Could It Happen in the United States?” CRS Report RL31632 (17-page PDF)
- “Introduction to U.S. Economy: Inflation” CRS InFocus IF10477 (5-page PDF)
- “Debates over Exchange Rates: Overview and Issues for Congress,” CRS Report R43242 (34-page PDF)
- “Ramming a $15 Minimum Wage Bill Through the Senate Using Reconciliation Would Be a Norm-Busting Mistake,” by Eric Boehm, Feb. 3, 2021
Clarke and Dawe – Quantitative Easing
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CongressionalGlossary.com, from TheCapitol.Net
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