ECON 1BB3 Chapter 6: Chapter 6 - Measuring the cost of living
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ECON 1BB3 Full Course Notes
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Chapter 6 measuring the cost of living. Cpi is used to monitor changes in the cost of living over time. When cpi rises-typical family has to spend more dollars to maintain same standard of living. Inflation is used to describe a situation in which the economy s overall price level is rising. Inflation rate is the percentage change in the price level from the previous period. Cpi is a measure of the overall costs of the goods and services bought by a typical consumer. Data on over 600 different goods and services is used. 5 steps statistics canada follows: determine the basket y determine which prices are most important to the typical consumer. If the typical consumer buys more hot dogs than hamburgers, then hotdogs should be given a greater weight in measuring the cost of living. Price of basket of goods / services in current year. Cpi in year 2 cpi in year 1.