ECON 104 Lecture Notes - Lecture 5: Weighted Arithmetic Mean

• School: UMASS-Amherst
• Department: Economics
• Course: ECON 104
• Professor: Ozgur Orhangazi

Document Summary

*we will be building our model to look at how the economy functions. Consumer price index (cpi) a price index computed each month by the bureau of labor stats using a (cid:271)u(cid:374)dle that is (cid:373)ea(cid:374)t to represe(cid:374)t the (cid:862)(cid:373)arket (cid:271)asket(cid:863) pur(cid:272)hased (cid:373)o(cid:374)thl(cid:455) (cid:271)(cid:455) the t(cid:455)pi(cid:272)al ur(cid:271)a(cid:374) consumer. Produ(cid:272)er pri(cid:272)e i(cid:374)de(cid:454)es (cid:894)ppi"s(cid:895) measures of pri(cid:272)es that producers receive for products at all stages in the production process. O(cid:374)(cid:272)e (cid:272)alled (cid:449)holesale pri(cid:272)e i(cid:374)de(cid:454)es, ppi"s are (cid:272)al(cid:272)ulated separatel(cid:455) for various stages in the production process. The three main categories are finished goods, intermediate materials and crude materials, although there are subcategories. We look at the average cha(cid:374)ge i(cid:374) pri(cid:272)es, ho(cid:449)e(cid:448)er (cid:449)e do(cid:374)"t si(cid:373)pl(cid:455) look at the a(cid:448)erage, (cid:449)e look at the percentage of each consumer. Look at what you spend on in your shopping basket and look at it for each person every year.