Explain consumer price index, Macroeconomics

Assignment Help:

Q. Explain Consumer Price Index?

CPI is a price index of a particular basket known as the CPI-basket. CPI-basket comprise essentially all the servicesand goods consumed in a country -gas,food, medicine, haircuts, house rent, transportation and so on. Composition of the CPI basket is determined by value of what is consumed in the country - the larger the value of entire consumption of a good or service, the larger the weight in basket. For illustration, if we spend twice as much on apples as on pears, apples would have twice the weight in the basket.  The particular details of the composition of basket and how the CPI is calculated are complex and vary somewhat between nations. Figure below demonstrates CPI for Germany after the reunification starting at January 1991. This data has 2005 as the reference year. This means that CPI is constructed in such a way that CPI is exactly equal to 100 on average during 2005.

Figure

Consumer price index (CPI) for Germany 1991 - 2010. Source: OECD.

813_Explain Consumer Price Index.png


Related Discussions:- Explain consumer price index

What are UN millennium development goals, What are UN Millennium Developmen...

What are UN Millennium Development Goals? The UN Millennium Development Goals (MDGs): These are a set of objectives shared through the IMF, the OECD and the World Bank (WB)

Employ the weights, Employ the weights given below and suppose that 2002 is...

Employ the weights given below and suppose that 2002 is the base year with a CPI equal to 100. Suppose also that since 2002 the price of food has increased by 10 percent; the price

What is difference between explicit cost and implicit cost, What are the di...

What are the difference between explicit cost and implicit cost? Both are concerns to Opportunity Cost and Decisions: An explicit cost is a cost which involves essentially

Gkx industries expects sales of its hydraulic seals, GKX Industries expects...

GKX Industries expects sales of its hydraulic seals (in inch and metric sizes) to increase according to the cash flow sequence $70+4k, where k is in years and cash flow is in $1000

Slope of the aggregate expenditure curve, Consider an economy with the foll...

Consider an economy with the following characteristics: i. The price-level is fixed ii. The economy is closed (Exports - Imports = 0) iii. Government spending (G) and Inve

WHAT ECONOMICS IS ABOUT, ALL SELLERS MAY BE TEMPTED TO RAISE THE PRICE OF W...

ALL SELLERS MAY BE TEMPTED TO RAISE THE PRICE OF WHAT THEY SELL, BUT A NEGATIVE UNINTENDED EFFECT OF RAISING THE PRIE COULD BE______ IN UNITS SOLD LARGE ENOUGH TO _____THEIR TOTAL

Number of gallons of paint, The number of gallons of paint that Home Depot ...

The number of gallons of paint that Home Depot sells in a given day is normally distributed with a mean of 150 gallons and a standard deviation of 35 gallons (I realize that the di

Trade liberalisation under wto, TRADE LIBERALISATION UNDER WTO: In  th...

TRADE LIBERALISATION UNDER WTO: In  the Uruguay Round negotiations, India agreed to reduce tariff on a  large number of  commodities and  remove quantitative restrictions (QRs

Advantages of leaving resource allocation, What are the advantages of leavi...

What are the advantages of leaving resource allocation to price allocation? Ans) The 5 benefits are Neutral, Flexible, Freedom of choice, No administrative cost and lastly Dimin

Consumption function of an economy, The consumption function of an economy ...

The consumption function of an economy is given by c = 200+0.75(y-t) And the investment function by I = 200 = - 25r. Government purchases G and taxes Τ are both 100.  T

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd