ECON 102 Chapter Notes - Chapter 6: Market Basket, Menu Cost, Gdp Deflator

• School: UBC
• Department: Economics
• Course: ECON 102
• Professor: Cheryl F U

Document Summary

The consumer price index is used to monitor changes in the cost of living over time. When the consumer price index rises, the typical family has to spend more dollars to maintain the same standard of living. Economists use the term inflation to describe a situation in which the economy"s overall price level is rising. The inflation rate is the percentage change in the price level from the previous period. The consumer price index (cpi): the overall measure of the cost of the goods and services bought by a typical consumer. How the consumer price index is calculated: Every month, statistics canada computes and reports the cpi. It uses data on the prices of more than 600 different goods and services. To see how these statistics are constructed, a simple economy with two goods, hot dogs and hamburgers, is used.