Unformatted text preview: that, over time, the money used to buy ice cream has become less valuable. Indeed, the first insight about inflation is that it is more about the value of money than about the value of goods. This insight helps point the way toward a theory of inflation. When the con-sumer price index and other measures of the price level rise, commentators are often tempted to look at the many individual prices that make up these price indexes: “The CPI rose by 3 percent last month, led by a 20 percent rise in the price of coffee and a 30 percent rise in the price of heating oil.” Although this ap-proach does contain some interesting information about what’s happening in the ”So what’s it going to be? The same size as last year or the same price as last year?”...
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- Spring '10
- Inflation, ice cream, Consumer price index