MacroEcon Lecture CPI

MacroEcon Lecture CPI - Calculation of inflation for a...

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Calculation of inflation for a certain year: 2 methods of how a price commodity is in economy over time Index Number Percentages to express this change in price level Government came up with a list of 400 most important goods and services sold in the US for a typical household How does government decide? Government figures out how much money each household makes and sees what they spend it on Figures out this $ amount and divides it by the avg household How much consumers spend for coca cola and then divide it by the typical household Government uses certain brand names to represent the category (ex: coca cola) Everything spend different amount of money in different categories 15 litres of coca cola- they wouldn’t go back and change the quantity and adjust it; composition of basket wasn’t changed recently this is sort of a reflection of GDP; exclusively consumer goods inside the basket we include important commodities and second hand commodities (ex:
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This note was uploaded on 12/13/2011 for the course ECON 8732 taught by Professor Kitsikopoulos during the Fall '11 term at NYU.

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MacroEcon Lecture CPI - Calculation of inflation for a...

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