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ECON 1BB3 (535)
Lecture

Lecture: Should I spend my money now or save for a rainy day?

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Department
Economics
Course
ECON 1BB3
Professor
Bridget O' Shaughnessy
Semester
Winter

Description
thEconomics Lecture January 26 2012Should I spend my money now or save for a rainy dayUsing CPI Example your father earned 40000 in 1982What is this salary worth in 2010 dollarsCPI1982618 CPI20111163 Answer 116361840000 40000x116361875275Highest grossing movie of all time Avatar and Gone With the WindProblems with CPI11 higher than CPI really is cause of these problems y There are 3 problems with CPI 1 Substitution biasignores consumer substitution overstates inflation 2 Introduction of new goodsCPI is based on a fixed basket of goods and services overstates inflation tends to be electronics3 UnMeasured quality changesome price changes reflect quality improvements overstates inflationGDP is only things produced in Canada Price of bananas goes up CPI increasesCPI vs GDP deflator 1 CPIgoods and services bought by typical consumers GDP deflatorreflect
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