ECON 102 Lecture Notes - Core Inflation, Gdp Deflator, Capital Good

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bronzecod363

16 Oct 2011

School

Simon Fraser University

Department

Economics

Course

ECON 102

Professor

Jing Ye Shi

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Document Summary

Chapter 6 measuring the cost of living. Introduction the prices of nearly all goods and services have been increasing over time, but so have people"s incomes. Economists measure overall cost of living using cpi. Also to compare prices now with those in the past, the consumer price index (cpi) is used. Cpi is a measure of the overall cost of goods and services bought by a typical customer. Core inflation the measure of the underlying trend of inflation; excludes the most volatile components from the cpi basket of goods and services. Cpi is also calculated on other indexes: Economists and policymakers monitor both the gdp deflator and cpi to tell how prices are changing and usually the two stats. tell the same story but there are two important differences. Gdp deflator reflects prices of all goods and services produced domestically. Cpi reflects the prices of g and s bought by customers. Excluded from gdp deflator: capital goods:

Related Questions

There are many different types of market baskets that economists measure. For example, the market basket for consumers called the 'Consumer Price Index' tracks the prices associated with the typical consumer's purchases of goods and services. The 'Producer Price Index' tracks the prices that firms receive when selling their goods and services.

Indicate the appropriate market basket to use in each of the following instances.

Consumer Price Index:

a)	Measuring differences in the cost of living between different cities.
b)	Examining price changes that might affect businesses.
c)	Measuring the cost of living for a typical consumer.

Producer Price Index:

A)	Measuring differences in the cost of living between different cities.
B)	Examining price changes that might affect businesses.
C)	Measuring the cost of living for a typical consumer.

amaranthbuffalo689

TRUE or FALSE?

1. When the consumer price index falls, the typical family has to spend fewer dollars to maintain the same standard of living.

2. Economists use the term inflation to describe a situation in which the economy's overall price level is rising.

3. When a new good is introduced, consumers have more variety from which to choose, and this, in turn, increases the cost of maintaining the same level of economic well-being.

4. The real interest rate is the interest rate corrected for inflation.

5. Like physical capital, human capital is a produced factor of production.

crimsonalligator541

When the consumer price index rises, the typical family:

a) has to spend more dollars to maintain the same standard of living.

b) can offset the effects of rising prices by saving more.

c) can spend fewer dollars to maintain the same standard of living.

d) finds that its standard of living is not affected.

pearchinchilla659

ECON 102 Lecture Notes - Core Inflation, Gdp Deflator, Capital Good

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