ECO 1102 Lecture Notes - Lecture 3: Corporate Bond, Core Inflation, Composite Good

• School: University of Ottawa
• Department: Economics
• Course: ECO 1102
• Professor: David Gray

Document Summary

Chapter 6 - measuring the cost of living. The consumer price index: cpi: a measure of the overall cost of the goods and services bought by a typical consumer. How the cpi is calculated: 5 steps. Determine the basket: which prices are most important to the typical consumer. Compute the basket"s cost: us the data on price to find the cost of the basket of goods and services and different times. Chose a base year and compute the index: chose a year as benchmark for other year to be compared. Cpi = (price of basket of goods and services in current year / price of basket in base year) x 100. Compute the inflation rate: use cpi to find inflation rate (% change in the price index from preceding period) Inflation rate in year 2 = ((cpi in year 2 - cpi in year 1) / cpi in year 1) x 100.