Lecture Notes 3-25-10 - Lecture Notes Chapter 16 Economics...

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Lecture Notes Economics T-Th A. Ordonez Chapter 16 809-195-3K1C 3/25/10 CH. 16: Measuring the Cost of Living Inflation refers to a situation in which the economy's overall price level is rising. The Inflation Rate is the percentage increase in the price change level from the previous period. The Consumer Price Index (CPI) is a measure of the overall cost of the goods & services bought by a typical consumer. The Bureau of Labor Statistics (BLS) reports the CPI each month It is used to monitor changes in the cost of living over time. When the CPI rises, the typical family has to spend more dollars to maintain the same standard of living How the CPI is Calculated 1. Fix the Basket : determining what prices are most important to the typical consumer. a. The BLS identifies a market basket of goods & services the typical consumer buys. b. The BLS conducts monthly surveys to set the weights for the prices of those 2. Find the Prices
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Lecture Notes 3-25-10 - Lecture Notes Chapter 16 Economics...

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