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9 Cards in this Set
- Front
- Back
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Consumerr price index(cpi)
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measure of the average of the prices paid by urban consumer for a fixed market basket of consumer goods and services (cost of living)
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CPI baskt (typical market basket):
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There two types and they calculate 2 CPI's. CPI-U: avg price paid by all urban households and CPI-W: avg price paid by urban wage erners and clerical workers. CPI-U is broader and we will focus more on it.
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What is the consumer expenditure survey
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given to select which basket is relevent
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Calculating CPI, what are the 3 steps?
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1. Cost of CPI basket at base price
2. Cost of CPI basket at Current price 3. Calc CPI for base and current period |
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What are the uses of CPI
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To calculate inflation rate
Use it to deflate to real values You can index up. |
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How do you calc inflation rate?
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CPI current year-Cpi previous year /CPI in previous year x 100
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What is deflating to real values?
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Real=nomical/price index
or Price index=nominal/real |
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What is indexing up?
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Nominal=price index X real
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What is the purpose in a cost of living index?
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to measure changes in amount of money tha tppl would need to spend to achieve a given standard of living
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