Chapter 6 Measuring the Cost of Living

Chapter 6 Measuring the Cost of Living - 6-1Chapter 6:...

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Unformatted text preview: 6-1Chapter 6: Measuring the Cost of LivingoInflation oDeflation oDisinflation 6-26-34 steps to constructing a price index: Calculation of a Price IndexConsumer Price IndexMacroland example:19901991QuantityPriceQuantityPriceMilk(bags)Compact 6-46-5Discs(#)Calculate the consumer price index:Cost of basket in base year (1990): Pmilk1990(Qmilk1990) + PCD1990(QCD1990)Cost of basket in the current year (1991): Pmilk1991(Qmilk1990) + PCD1991(QCD1990)6-6oCPI1991Inflation:Formula for Percentage Change:6-7Example:oIf the CPI in Year 1 is 125 and the CPI in Year 2 is 150, calculate the inflation rateI n f l a t i o n C a l c u l a t o rAbout the CalculatorThe Inflation Calculator uses monthly consumer price index (CPI) data from 1914 to the present to show changes in the cost of a fixed "basket" of consumer purchases. These include food, shelter, furniture, clothing, transportation, and recreation. An increase in include food, shelter, furniture, clothing, transportation, and recreation....
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Chapter 6 Measuring the Cost of Living - 6-1Chapter 6:...

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