ECON-002 Lecture Notes - Lecture 14: Supplemental Security Income

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Published on 27 Mar 2017
March 2nd, 2017
Measuring the Price Level
(the inflation rate is the percentage change in the price level)
2 ways to measure price level:
1. Market-basket-based price indices: CPI, PPP
2. NIPA-based price indices: GDP implicit deflator, PCE index
Market-basket-based price indices
Consumer Price Index (CPI)
-constructed by BLS
-choose a market basket period (2005-2006). BLS (Bureau of Labor Statistics) also chooses a
“reference period” (1982-84)
-identify a “market basket” of consumption items for a typical urban family of four
CPI = (value of basket in current year)/(value of basket in reference period)x100
Different types of CPIs:
-CPI-U: Consumer Price Index for All Urban Consumers
-C-CPI-U: a chain-weighted version (corrects for a type of bias in CPI-U)
-Core-CPI-U: excludes volatile food and energy prices
-CPI-W: Consumer Price Index for Urban Wage Earners and Clerical Workers on a monthly
basis. Use CPI-W to adjust benefits paid to social security beneficiaries and Supplemental
Security Income recipients
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