Economics_Ch11

# To simplify things well say that the market 11 8

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Unformatted text preview: he total current-year expenditure by the total base-year expenditure, and multiply by 100. Exhibit 11-8 provides an example. To simplify things, we’ll say that the market 11-8 CCalculatingthe Consumer Price Index Calculating the Consumer PriceIndex alculating alculating the Index Step 1: Calculate the total dollar expenditure on the market basket in the base year and the current year. These amounts are calculated in column 3 (\$150) and column 5 (\$180), respectively. (1) (1) Goods the Goods in the mar et bas market basket (2) (2) Price in Price in base year base year (4) (4) Price in Price in current current year year 10 CDs CD \$13 \$15 5 T-shirts \$4 \$6 \$150 Total dollar expenditure on the market basket in the base year Step 2: Divide the total dollar expenditure on the market basket in the current year by the total dollar expenditure on the market basket in the base year, and then multiply by 100. 302 Chapter 11 Measuring Economic Performance \$180 Total dollar expenditure on the market basket in the current year CPIcurrent year = Total dollar expenditure on the market basket in current year Total dollar expenditure on the market basket in base year \$180 \$150 = 120 11 (28...
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## This document was uploaded on 01/16/2014.

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