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2/21 - 2/2 EC 02/02/2009 11:04:00 Consumer price index...

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2/2 EC 02/02/2009 11:04:00 Consumer price index Unemployment Definition/measurement Types of unemployment Unemployment among specific groups how the BLS construcst the CPI 1. survery consumers to detemine composition of the typical consumers basket  of goods 2. evey month, collect data on prices of all items in the basket; compute cost of  basket. 3. CPI in a month = 100 x cost of basket in that month/ bost of basket in base period. Calculating the CPI Inflating between period t and peroid t+n Reasons why the CPI may overstate inflation.     substitution bias : CPI uses fixed weights, so it cannot reflect consumers’ ability  to substitute toward goods whose relative prices have fallen.  There are always new goods being introduced Unmeasured changes in quality  – quality improvements increase the value of  the dollar. CPI v. GDP
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This note was uploaded on 04/01/2009 for the course EC 102 taught by Professor Zagorsky during the Spring '08 term at BU.

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2/21 - 2/2 EC 02/02/2009 11:04:00 Consumer price index...

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