ECON-002 Lecture Notes - Lecture 14: Supplemental Security Income
27 Mar 2017
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Measuring the price level (the inflation rate is the percentage change in the price level) 2 ways to measure price level: market-basket-based price indices: cpi, ppp, nipa-based price indices: gdp implicit deflator, pce index. Bls (bureau of labor statistics) also chooses a. Identify a market basket of consumption items for a typical urban family of four. Cpi = (value of basket in current year)/(value of basket in reference period)x100. Cpi-u: consumer price index for all urban consumers. C-cpi-u: a chain-weighted version (corrects for a type of bias in cpi-u) Core-cpi-u: excludes volatile food and energy prices. Cpi-w: consumer price index for urban wage earners and clerical workers on a monthly basis. Use cpi-w to adjust benefits paid to social security beneficiaries and supplemental. There are 3 ways to use the cpi: express historical prices in current dollars, or vice versa. 2: compute an inflation rate index a dollar payment, to maintain purchasing power during periods of inflation.
