文档介绍：该【经济学原理第二章 】是由【相惜】上传分享，文档一共【32】页，该文档可以免费在线阅读，需要了解更多关于【经济学原理第二章 】的内容，可以使用淘豆网的站内搜索功能，选择自己适合的文档，以下文字是截取该文章内的部分文字，如需要获得完整电子版，请下载此文档到您的设备，方便您编辑和打印。MeasuringtheCostofLiving
Economics
PRINCIPLESOF
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Inthischapter, lookfortheanswerstothesequestions:
WhatistheConsumerPriceIndex(CPI)? Howisitcalculated?What’situsedfor?
WhataretheproblemswiththeCPI?Howseriousarethey?
HowdoestheCPIdifferfromtheGDPdeflator?
HowcanweusetheCPItocomparedollaramountsfromdifferentyears?Whywouldwewanttodothis,anyway?
Howcanwecorrectinterestratesforinflation?
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TheConsumerPriceIndex(CPI)
measuresthetypicalconsumer’scostofliving
thebasisofcostoflivingadjustments(COLAs)inmanycontractsandinSocialSecurity
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HowtheCPIIsCalculated
Fixthe“basket.” TheBureauofLaborStatistics(BLS)surveysconsumerstodeterminewhat’sinthetypicalconsumer’s“shoppingbasket.”
Findtheprices. TheBLScollectsdataonthepricesofallthegoodsinthebasket.
Computethebasket’scost. Usethepricestocomputethetotalcostofthebasket.
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HowtheCPIIsCalculated
Chooseabaseyearandcomputetheindex. TheCPIinanyyearequals
Computetheinflationrate. ThepercentagechangeintheCPIfromtheprecedingperiod.
100x
costofbasketincurrentyear
costofbasketinbaseyear
CPIthisyear–CPIlastyear
CPIlastyear
Inflation rate
x100%
=
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EXAMPLE
basket:{4pizzas,10lattes}
$12x4+$3x10=$78
$11x4+$=$69
$10x4+$2x10=$60
costofbasket
$
$
$
priceoflatte
$12
2009
$11
2008
$10
2007
priceofpizza
year
ComputeCPIineachyear
2007:100x($60/$60)=100
2008:100x($69/$60)=115
2009:100x($78/$60)=130
Inflationrate:
15%
115–100
100
x100%
=
13%
130–115
115
x100%
=
using2007baseyear:
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ACTIVELEARNING1 CalculatetheCPI
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CPIbasket: {10lbsbeef, 20lbschicken}
TheCPIbasketcost$120 in2004,thebaseyear.
A. ComputetheCPIin2005.
B. WhatwastheCPIinflationratefrom2005-2006?
priceofbeef
priceofchicken
2004
$4
$4
2005
$5
$5
2006
$9
$6
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ACTIVELEARNING1 Answers
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A. ComputetheCPIin2005:
CostofCPIbasketin2005 =($5x10)+($5x20)=$150
CPIin2005=100x($150/$120)=125
CPIbasket: {10lbsbeef, 20lbschicken}
TheCPIbasketcost$120 in2004,thebaseyear.
priceofbeef
priceofchicken
2004
$4
$4
2005
$5
$5
2006
$9
$6
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ACTIVELEARNING1 Answers
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priceofbeef
priceofchicken
2004
$4
$4
2005
$5
$5
2006
$9
$6
CPIbasket: {10lbsbeef, 20lbschicken}
TheCPIbasketcost$120 in2004,thebaseyear.
B. Whatwastheinflationratefrom2005-2006?
CostofCPIbasketin2006 =($9x10)+($6x20)=$210
CPIin2006=100x($210/$120)=175
CPIinflationrate=(175–125)/125=40%
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What’sintheCPI’sBasket?
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