ECON 200 Lecture Notes - Lecture 10: Producer Price Index, Market Basket, Price Level

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14 Dec 2019

School

University of Arizona

Department

Economics

Course

ECON 200

Professor

Chandini Sankaran

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ECON 200 Full Course Notes

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A measure of the average prices of goods and services; measured by price indexes like gsp price deflator and cpi. % increase in price level between periods. Measures the cost of living for the typical consumer. Cost of typical basket of goods and services bought by consumers. Measures the cost of typical basket of goods and services bought by firms. Both cpi and ppi are measured monthly by the bureau of labor statistics part of the us department of labor. A measure of the average change over time in the prices of a typical urban family of four pays for the goods and services they purchase. Comes from a survey of 14k households. Cpi-inflation is sometimes used to generate fair increases in wages for workers, and gov"t benefits (cost of living adjustment cola) indexed for inflation. Identify a fixed market basket of goods and services the consumer buys by surveying households. Ex. basket: 10 bananas, 20 massages, 40 margaritas.

Related Questions

Which of the following statements is true about the consumer price index (cpi):

A.It measures cost of representative basket of goods at the level of first significant commercial transaction

B.It measure of the average prices paid by consumers for all goods and services

C.It is used to measure the standard of living in an economy

D.It measures the average prices paid by consumers for a fixed basket of goods services

E. None of the above

beigebee838

Measures of Inflation The GDP deflator is the broadest, most inclusive measure of change in the country's price level since it includes all final goods and services produced and sold. But the GDP deflator is not used by the government or economists as the benchmark measure of inflation; instead, the consumer price index (CPI) is used to determine changes in the cost of living. What is the shortcoming of the GDP deflator as a measure of inflation for households, and why is the CPI considered to be a more useful measure?

greycoyote29

Table 24-7. The table below applies to an economy with only two goods â hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs.

Year	Price of hamburgers	Price of hot dogs
2009	$5	$3
2010	5.50	3.30
2011	5.61	3.63

Refer to Table 24-7. Between 2009 and 2011, the cost of living increased by

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

A. the CPI is calculated more often than the GDP deflator is.

B. the CPI is easier to measure.

C. the GDP deflator cannot be used to gauge inflation.

D. the CPI better reflects the goods and services bought by consumers.

A COLA automatically raises the wage when:

A. the consumer price index increases.

B. the producer price index increases.

C. taxes increase.

D. GDP increases.

ECON 200 Lecture Notes - Lecture 10: Producer Price Index, Market Basket, Price Level

ECON 200 Full Course Notes

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