Here are the economics words you need to know

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GDP – Gross Domestic Product, indicates the value of all goods and services produced in a country for use in consumption, investment and export over a period.

Growth – An increase over time in GDP.

Recession – The opposite of growth (negative growth). Technically, it is usually defined as two quarters in a row with reduced GDP. But the term is also often associated with symptoms such as high unemployment, bankruptcies, credit losses and financial problems.

Stagnation – A period of prolonged recession or poor growth.

Inflation – Inflation is an increase in the general price level that allows one to buy fewer goods and services for the same amount of money. The money decreases in value. The word comes from the verb inflate (inflate).

Deflation – The opposite of inflation, a decrease in the general price level.

Shrinkflation – When companies shrink the size of the item to hide increased prices.

CPI – Consumer Price Index (CPI) measures the price of an average basket of a variety of goods and services that Swedish consumers buy. The change in the CPI at an annual rate is the main measure of inflation.

Core inflation (or underlying inflation) – The consumer price trend cleared of certain parts that are due to chance. You can, for example, discount temporarily rising petrol prices, electricity prices or interest rates.

CPIF – A measure of underlying inflation where the variable interest rate is not included, which the Riksbank uses for its inflation target.

PPI – Producer Price Index, shows how prices develop for producers in Sweden and what importers have to pay to get goods delivered here.

Stagflation – An economic situation in a country when there is stagnation (poor growth) and high inflation at the same time. High unemployment and high interest rates are also usually part of the picture when talking about stagflation.

Policy rate – The Riksbank’s main monetary policy tool. By raising or lowering the key interest rate, other interest rates are affected, which affects demand in the economy and thus inflation. The policy rate is the interest that the banks receive when they place and borrow money in the Riksbank.

Inflation Targeting – Central banks around the world aim for an inflation target when deciding what interest rate level is appropriate. The aim is to have stable prices and expectations in the economy. The Riksbank’s inflation target is an inflation of around 2 percent according to the CPIF measure.

Double increase – The Riksbank normally raises and lowers the key interest rate in steps of 25 basis points (0.25 percentage points). If the increase is 0.5, we talk about a double increase, and in the same way a triple increase if the interest rate is increased by 0.75 percentage points.

Real wages – The purchasing power of wages or income in goods and services. When prices rise, the real wage falls.

Fixed prices – Prices calculated based on a certain year’s value. The national accounts are often calculated with fixed prices, so that comparisons can be made over time independent of inflation.

List rate – The interest rate that the banks advertise, which is on the website.

Average interest rate – Interest rate that is an average interest rate based on the customers’ interest rate negotiations with the bank.

Sources: The Institute of Economic Research, the Riksbank, NE, Statistics Sweden