110_lec17_Consumer_Price_Index

110_lec17_Consumer_Price_Index - Consumer Price Index...

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Consumer Price Index Calculated monthly Measures changes in the prices of goods and services over time. Measures the buying power of the dollar over time. Falling Buying Power: If the same goods & services cost more, then the dollar is worth less. In fact, CPI tells us that the dollar at the beginning of 2000 would buy ½ as much as the dollar in 1980. Therefore, if you did not earn twice as much in 2000 as in 1980, then you lost buying power.
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Consumer Price Index As the CPI increases, Social security payments rise automatically. Pensions of retirees of military & federal civil service rise. Over 2 million union salaries are affected. Incomes of over 80 million people are also directly affected. Income Tax Brackets go up. When CPI rises by 1%, government spending goes up by $6 billion a year.
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Index Numbers An index number measures the value of a variable relative to its value at a base period. To find the index number for any value of a variable: ) 100 ( value base value number index =
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The average price of 500 KWH of electricity in January 1980 was $27. In January 2003 it was $48. Average City Price per 500 KWH
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110_lec17_Consumer_Price_Index - Consumer Price Index...

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