CPI inflation measure- constructing and calculating

Question 1

inflation

Answer 1

persistent increase of prices in an economy in a year

Question 2

different types of inflation rates

Answer 2

-higher price level: inflation
-lower price level: disinflation
-negative price level: deflation

Question 3

CPI, how to use, what it is

Answer 3

-expenditure survey carried out
-consumer basked of most popular goods/services is formed with price averages attached
-prices of these goods/services are weighted based on income (10% = 0.1)
-weighted prices are added to give total weighted price of basked

Question 4

issues with CPI

Answer 4

-average family- personal inflation rates differ (low income vs high income, holidays)
-price fluctuations of certain goods (food, energy) if demand and supply shifts for inelastic, any price. core CPI = CPI minus. change will massively affect
-housing costs: CPIH- rent, mortgage not counted
-basket updates too slow