ECO102H1 Lecture 5: ECO102-LEC5-CPI&Inflation
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If the cpi meas. me inflation rate will overstate the increase in the cost of. 600 for quality living increase in price quality improved while. Price remained constant true better product deserves a higher price. 0 takes a while for new goods to be included. Media low weight in the cpi low baseyearquantity. Big t price gets too line weigh in the cpi. Cpi measured inflation will overstate the true increase in cost of living. Inflation as per cpi 45 change in meat spending 27 real. Basket is not kept fixed overstate move toward the item has small price increase. 0 2 inflation rate higher level of inflation expected vs unexpected inflation. Realwstofinflatiour. co increases as the level of st inflation increases. Distortions in the tax when not loss of purchasing power indexed1 childcare expense tax deduction and benefit systems. Of holding cash to not hold cash more effort.
