Economics 10b Chapter 24: Chapter 24 Notes

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emeraldraccoon202

10 Jan 2019

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Consumer price index: a measure of the overall cost of the goods and services bought by a typical consumer. Used to monitor changes in the cost of living over time. When cpi rises, a family has to pay more money to maintain the same standard of living. Inflation rate: the percentage change in the price level from the previous period. Determine which prices are most important to the typical consumer (fix the basket) find the prices of each of the goods and services in the basket at each point in time (find the prices) Use the data on prices to calculate the cost of the basket of goods and services at different times (compute the basket"s cost) Designate one year as the base year, the benchmark against which other years are compared (choose a base year and compute the index) Cpi= ((price of the basket of goods and services in current years)/(price of basket in base year)) x 100.

Related Questions

There are many different types of market baskets that economists measure. For example, the market basket for consumers called the 'Consumer Price Index' tracks the prices associated with the typical consumer's purchases of goods and services. The 'Producer Price Index' tracks the prices that firms receive when selling their goods and services.

Indicate the appropriate market basket to use in each of the following instances.

Consumer Price Index:

a)	Measuring differences in the cost of living between different cities.
b)	Examining price changes that might affect businesses.
c)	Measuring the cost of living for a typical consumer.

Producer Price Index:

A)	Measuring differences in the cost of living between different cities.
B)	Examining price changes that might affect businesses.
C)	Measuring the cost of living for a typical consumer.

amaranthbuffalo689

Which of the following statements is true about the consumer price index (cpi):

A.It measures cost of representative basket of goods at the level of first significant commercial transaction

B.It measure of the average prices paid by consumers for all goods and services

C.It is used to measure the standard of living in an economy

D.It measures the average prices paid by consumers for a fixed basket of goods services

E. None of the above

beigebee838

An advantage of the personal consumption expenditures price index (PCE) over the consumer price index (CPI) as a measure of inflation is that the PCE

A) includes the prices of consumer goods, but not consumer services.

B) includes the prices of consumer services, but not consumer goods.

C) includes the prices of more consumer goods and services.

D) is a fixed market-basket price index that does not allow the mix of products to change each year

redcattle972

Economics 10b Chapter 24: Chapter 24 Notes

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