AUECO102 Lecture 2: AUECO 102- Lecture 2
Document Summary
Inflation refers to a situation in which the economy"s overall price level is rising. The inflation rate is the percentage change in the price level from the previous period. The consumer price index (cpi) is a measure of the overall cost of the goods and services bought by a typical consumer. Statistics canada reports the cpi each month. It is used to monitor changes in the cost of living over time. When the cpi rises, the typical family has to spend more dollars to maintain the same standard of living. How the consumer price index is calculated (very important all these lines below) Determine the basket: determine what prices are most important to the typical consumer. If the typical consumer buys more hot dogs than hamburgers, then the price of hotdogs us more important and is given more weight in measuring the cost of living.