10-unemploy - CPI and Unemployment Lecture 10-PREVIEW Dr....

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macroS2010 Lec10-page 1 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ CPI and Unemployment Lecture 10-PREVIEW Dr. Jennifer P. Wissink ©2009 Jennifer P. Wissink, all rights reserved. February 24, 2010
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macroS2010 Lec10-page 2 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ The Implicit GDP Deflator Index Deflating: changing a measure from a current or nominal value to a real value by use of a deflator. implies you need a deflator To deflate: $nominal/deflator = $real So. .. turn things on their head $nominal/$real = deflator Note: the government reports the following $nominal GDP $real GDP So. .. [$nominal GDP/$real GDP] = implicit GDP deflator And. .. [$nominal GDP/$real GDP] * 100 = implicit GDP Deflator INDEX
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macroS2010 Lec10-page 3 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ macroS2010 Lec9-page 3 Real GDP & the Implicit GDP Deflator Index GDP in billions of current dollars GDP in billions of chained 2000 dollars 1975 1,638.3 4,311.2 1976 1,825.3 4,540.9 1977 2,030.9 4,750.5 1978 2,294.7 5,015.0 1979 2,563.3 5,173.4 1980 2,789.5 5,161.7 1981 3,128.4 5,291.7 1982 3,255.0 5,189.3 1983 3,536.7 5,423.8 1984 3,933.2 5,813.6 1985 4,220.3 6,053.7 1986 4,462.8 6,263.6 1987 4,739.5 6,475.1 1988 5,103.8 6,742.7 1989 5,484.4 6,981.4 1990 5,803.1 7,112.5 1991 5,995.9 7,100.5 1992 6,337.7 7,336.6 1993 6,657.4 7,532.7 1994 7,072.2 7,835.5 1995 7,397.7 8,031.7 1996 7,816.9 8,328.9 1997 8,304.3 8,703.5 1998 8,747.0 9,066.9 1999 9,268.4 9,470.3 2000 9,817.0 9,817.0 2001 10,128.0 9,890.7 2002 10,469.6 10,048.8 2003 10,971.2 10,320.6 2004 11,734.3 10,755.7 2005 12,479.4 11,131.1
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macroS2010 Lec10-page 4 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ macroS2010 Lec9-page 4 Using An Index
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macroS2010 Lec10-page 5 http://www.arts.cornell.edu/econ/wissink/econ102jpw/ ANOTHER Measure of Inflation: The Consumer Price Index The consumer price index (CPI) is a price index computed each month by the Bureau of Labor Statistics using a bundle that is meant to represent the “market basket” purchased monthly by the typical urban consumer. It’s the most popular fixed- weight price index. The CPI market basket shows how a typical consumer divides his or her money among various goods and services. Food and Beverages 15.6% Other Goods and Services 4.3% Apparel 4.2% Housing 40.9% Transportation 17.3% Medical Care 6.0% Education and Communication 5.8% Recreation 5.9%
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TABLE 7.5 The CPI, 1950–2007 Percentage Change in CPI CPI Percentage Change
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10-unemploy - CPI and Unemployment Lecture 10-PREVIEW Dr....

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