Textbook Notes (363,566)
Canada (158,433)
Economics (923)
ECN 204 (281)
Eric Kam (28)
Chapter 6

Chapter 6 - Measuring the Cost of Living

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Ryerson University
ECN 204
Eric Kam

thWednesday January 25 2012 Chapter 6 Measuring the Cost of Living The Consumer Price Index CPI Measures the typical consumers cost of living The basis of cost of living adjustments COLAs in many contracts and in Social SecurityCOLAcost of living allowanceHow the CPI Is Calculated 1 Determine the basket Statistics Canada surveys consumers to determine whats in the typical consumers shopping basket 2 Find the prices Statistics Canada collects data on the prices of all the goods in the basket 3 Compute the baskets cost Use the data on prices to compute the total cost of the basket 4 Choose a base year and compute the index The CPI in any year equals100 x cost of basket in current yearcost of basket in base year 5 Compute the inflation rate The percentage change in the CPI from the preceding period Inflation RateCPI this yearCPI last yearCPI last year x 100Problems with the CPI Commodity S
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