Inflation adjustment
Overview
 
Inflation adjustment is the process of adjusting economic indicators and the price
Price
-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...

s of goods and services
Goods and services
In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility. It is often used when referring to a Goods and Services Tax....

 from different time periods to the same price level
Price level
A price level is a hypothetical measure of overall prices for some set of goods and services, in a given region during a given interval, normalized relative to some base set...

. To adjust for inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

, an indicator is divided by the inflation index. This adjustment process takes prices — generally for a given year (e.g., "1942 dollars") — in the original "nominal dollars" and renders them into "constant dollars
Constant dollars
The term constant dollars refers to a metric for valuing the price of something over time, without that metric changing due to inflation or deflation. The term specifically refers to dollars whose present value is linked to a given year. The term constant dollars refers to a metric for valuing the...

" (also referred to as "today's dollars").

It is easy to show that 7% inflation, lasting 10 years, would nearly double the cost of living (1.07^10=1.96).
Quotations

The inhabitants of the earth are of two sorts: Those with brains, but no religion, And those with religion, but no brains.

Al-Ma'arri|Abu'l-

A little philosophy inclineth man's mind to atheism; but depth in philsophy bringeth men's minds about to religion.

Francis Bacon|Sir Francis Bacon, Essays, 16, "Of Atheism"

Atheism leaves a man to sense, to philosophy, to natural piety, to laws, to reputation; all which may be guides to an outward moral virtue, though religion were not; but superstition dismounts all these, and erecteth an absolute monarchy, in the minds of men.

Sir Francis Bacon, Essays, 16, "Of Superstition"

ATHEISM: A godless religion that retains all the dogmatic posturing of the faiths it so confidently denies, with few of the consolations.

Rick Bayan|Rick Bayan, The Cynic's Dictionary, unidentified ISBN/edition, unidentified chapter/page

 
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