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TAMIU Macroeconomics 2301 Chapter 5 & 7 Part III

TAMIU Macroeconomics 2301 Chapter 5 & 7 Part III -...

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Economics Exam CPI (Bureau of labor statistics) – uses the index to report inflation rates each month of each  year and it adjusts social security benefits and income brackets for inflation The BLS updates every 2 years so that it reflects the most recent patterns of consumer  purchases Market basket – 300 consumer goods and services that presumably are purchased by a typical  urban consumer Demand-Pull inflation – excess of total spending beyond the ecnomy’s capacity to produce Cost-Push – inflation may also arise on the supplu, or cost, side of the ecnomy costs are 
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Unformatted text preview: pushing upward where demand pull inflation demand is pulling it major source of cost push inflation has been supply shocks where there are abrupt increases in the cost of raw materials or engery inputs on per-unit productions and thus product prices. Per-unit production cost = total input cost/unit of output Rate of inflation = price of basket of current year/ price estimate basket in 1982 – 1984 times by 100...
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