We want to measure how the cost of living changes over time.
The main intuition here is that, over time, peoples’ incomes and the prices of goods and services increase. 30 years ago an ice cream sundae cost $1 and a typical economics professor earned $35,000. Now, a (bad) ice cream sundae costs $4.50 and a typical economics professor earns $70,000.
Main Parts of the Notes:
1. How do we measure the cost of living?
a. Using the GDP price deflator
b. Constructing the Consumer Price Index (CPI)
c. Deriving an inflation rate from the CPI
2. How do we adjust for inflation when comparing dollar values over time?
What are the weaknesses of the CPI as a measure of the cost of living?
Measuring The Cost of Living:
There are two broad measures of the cost of living: the GDP price deflator and the CPI. Both measures move together, so they paint a similar picture of the cost of living. We will briefly discuss the GDP deflator first, and then move on to the more important CPI.
GDP Price Deflator:
Last time we saw how we can calculate both nominal and real GDP. The idea here is to construct a measure (and index to be precise) of the cost of living using this information.
Recall, the only difference between nominal and real GDP is that changes in prices (the cost of living) ARE reflected in nominal GDP but are not in real GDP.
Intuitively, suppose you have the following information:
An Index is a term for a set of variables used as a measure for a more abstract concept. Public Administrators will often find it helpful to use several indicators to form a single measure. The GDP (Gross Domestic Product) is classic example of this. It is the classic measure for production of a country. GDP represents goods and services produced by a country during a certain time period.
Some of the indicators are Personal consumption, Government purchase, Private inventories, Paid in…
IN AUSTRALIA AND ONE OTHER COUNTRY
There is evidence that links food choice to food prices and affordability, this means that an individual’s dietary patterns is linked to his or her income (Lee et al. 2013). Brinkman et al. (2010) further explains that difference in food prices has greatly contributed to the global burden of overweight, obesity and an increase in non-communicable diseases (Cardiovascular diseases, diabetes and cancer).
Libsky (2009) and Andrieu et al. (2006)…
Only using the GDP to consider if an economy is doing does not take into account how much a dollar is worth. If a currency was experiencing hyperinflation, it would appear as if a county was experiencing rapid economic expansion. In reality, products would be outrageous prices where only a very few could afford halting the economy to a standstill. As said in Cocktail Party Economics “The real enemy of money is inflation, especially deadly hyperinflation strain, inflation can take a perfectly…
highly dependent on American consumers were greatly challenged by external economic circumstances and were forced to adapt to them in order to survive. Lincoln Electric Company expresses their reception of innovative thinking via their company motto that reads: “The actual is limited, the possible is immense” (Sharplin, 1989).
Aside from their motto, Lincoln also embodies the concept of innovation via their open-door management policy, worker-elected Advisory Board, and full accessibility to…
LINCOLN ELECTRIC COMPANY
In 1906, John C. Lincoln incorporated his company and moved from his one-room, fourth-floor factory to a new three-story building. John Lincoln preferred being an engineer and inventor rather than a manager, though, and it was to be left to another Lincoln to manage the company through its years of success.
• The Lincoln Electric Employees ' Association was formed in 1919 to provide health benefits and social activities. This organization continues today…
the penalty was being raised since Bush senior’s tenure in office, 15 years ago. In spite of the increase, Statistics indicate that OSHA fines are still relatively low compared to those charged by regulatory agencies like EPA.
What many await to see is whether OSHA will move fully to increase the penalties to raise the “catch-up” fee to full extent as stipulated in the new regulations. The budget agreement factored in the increase in order to compensate for the two decades lull, which has…
lifetime of the 18-26 age group (in fact, with a 4% surplus) and with the funding shortfall closed at 109% thereafter if the following is enacted. (Committee for a Responsible Federal Budget, CRFB)
The majority of financial solutions derive through the benefit formula. When SS was founded, the eligibility age was 65, though, life-expectancy was 61. Today, if an individual reaches 65, their life expectancy is 85, though retirement age is only 67 despite incredible advances in life-spans. (SSA)…
16 x 33 cm”, have a capacity of five point eight pounds, and features a medium, which is utilized to grow trees and plants with the use of the cremated remains (Bios Urn).
While there are limits to product variation which the Bios Urn offers, the possibilities are endless. The Bios Urn is offered with the following species of trees: maple, pine, ginkgo, beech, and ash (Bios Urn). The Bios Urn is offered with the growth medium without a seed that way the consumer is able to plant whatever they…
RETAIL MARKETING MIX
The basic function of retail is to provide the right goods at right place to right consumers at right time. The marketing tools that a retail organisation uses to pursue its marketing objectives are termed as marketing mix.
CHANNELS OF RETAIL MARKETING:
1. PRODUCT: One of the main elements of retail marketing mix is the products and services that store offers to the customer. The different products that the store offers are together termed as merchandise mix. Big…