ECON 200 Lecture Notes - Lecture 26: Black Market, Price Level, Producer Price Index
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Gdp doesn"t account for happiness, value of leisure, pollution/quality of environment, distribution of income, production that never enters a market; household production, underground economy. People in higher income countries usually live linger, are more educated and claim to be more satisfied with life. We based standards about growth on gdp but gdp does have limitations. Price level: a measure of the average prices of goods and services; measured by price indexes like gdp price deflator and consumer price index (cpi) Inflation rate: % increase in the price level between periods. Consumer price index (cpi): measures the cost of living for the typical consumer based on the cost of a typical basket of goods and services bought by consumer. Producer price index (ppi): measures the cost of a typical basket of goods and services bought by firms based on costs of production for firms. Both cpi and ppi are measured monthly by the bureau of labor statistics (bls) part of the.