ECON 114 Lecture Notes - Lecture 6: Market Basket, Gdp Deflator
Document Summary
The consumer price index is used to monitor changes in the cost of living over ime. When the consumer price index rises, the typical family has to spend more dollars to maintain the same standard of living. Economists use the term inlaion to describe a situaion in which the economy"s overall price level is rising. The inlaion rate is the percentage change in the price level from the previous period. The consumer price index (cpi) the overall measure of the goods and services bought by a typical consumer. Every month, stats canada computes and reports the cpi. It uses data on the prices of more than 600 diferent goods and services. Choose a base year and compute the index. Taken together, these sources of bias cause the cpi to overstate the cost of living by 0. 6 percentage points a year according to the bank of canada. The gdp delator versus the consumer price index: