Cost of Living (Block One) Flashcards
Final (Chapter 11)
1
Q
CPI
A
Consumer Price Index, a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
2
Q
Intuitive meaning
A
It tracks changes in the cost of living for typical households.
3
Q
Issues with CPI
A
Some issues include substitution bias, changes in quality, and the exclusion of certain goods and services.
4
Q
Calculating inflation rate using CPI
A
The inflation rate can be calculated using the formula: ((CPI in current year - CPI in previous year) / CPI in previous year) * 100.
