The CPI is computed through a four

# The CPI is computed through a four - 1 . .TheBureauofLabor 2

This preview shows pages 1–2. Sign up to view the full content.

The CPI is computed through a four-step process.  1. The fixed basket of goods and services is defined. This requires figuring  out where the typical consumer spends his or her money. The Bureau of Labor  Statistics surveys consumers to gather this information.  2. The prices for every item in the fixed basket are found. Since the same  basket of goods and services is used across a number of time periods to  determine changes in the CPI, the price for every item in the fixed basket must be  found for every point in time.  3. The cost of the fixed basket of goods and services must be calculated for  each time period. Like computing GDP, the cost of the fixed basket of goods and  services is found by multiplying the quantity of each item times its price.  4. A base year is chosen and the index is computed. The price of the fixed  basket of goods and services for each comparison year is then divided by the price

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 12/13/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

### Page1 / 2

The CPI is computed through a four - 1 . .TheBureauofLabor 2

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online