Measurement of inflation, Managerial Economics

Assignment Help:

Measurement of Inflation

The rate of inflation is measured using the Retail Price Index.  A retail Price Index aims to measure the change in the average price of a basket of goods and services that represents the consumption pattern of a typical household.  It estimates the change in the cost to consumers of a range of commodities that they typically buy.  It is usually prepared for different classes of consumers and for different areas. 

The calculation of the index requires:

  • Selection of commodities to be included in the consumers basket
  • Selection of the base period weights for each commodity
  • Date on prices of the commodities in the current period and in the base period

Such an index then estimates the cost of living or the purchasing power of incomes. If the index increases by 10% in a given period, wages would need to rise by 10% for purchasing power to remain constant.  It is in this regard that trade unions and workers demand that wages should increase pari-passu with the cost of living index.


Related Discussions:- Measurement of inflation

Isoquants, #question.meaning of isoquants and its types

#question.meaning of isoquants and its types

Fundamental, Fundamental of managerial economic

Fundamental of managerial economic

Determine a specific price of demand of product, Determine a Specific Price...

Determine a Specific Price of demand of product A proclamation concerning the demand of a product without mentioning its price is worthless. For instance, to state that demand

Describe the meaning of managerial economics, MEANING OF MANAGERIAL ECONOMI...

MEANING OF MANAGERIAL ECONOMICS Managerial economics which is used synonymously with business economics is a branch of economics which deals with application of microeconomic ana

Definition of monopoly, 1. Prof. Thomas "Generally the term Monopoly is use...

1. Prof. Thomas "Generally the term Monopoly is used to cover any effective price control, whether of demand or supply of services or goods; hardly it is used to mean a combination

Limitations of uneven distribution of income and wealth, Limitations of Une...

Limitations of Uneven Distribution of Income and Wealth Unlike the historical experience of the now developed countries, the rich in contemporary Third World Countries are not

Explain about smooth convex isoquant, Q. Explain about Smooth Convex Isoqua...

Q. Explain about Smooth Convex Isoquant? Smooth Convex Isoquant: This kind of isoquant presumes continuous substitutability of capital and labour over a certain range, beyond

A cost-push inflation , A cost-push inflation have as a result of workers' ...

A cost-push inflation have as a result of workers' attempts to push up their wages. Thus, inflation does not have to be monetary phenomenon." Is this statement true, false, or unce

What is the arc price elasticity of demand, 1.  Joe is evaluating the marke...

1.  Joe is evaluating the marketing strategy at his restaurant and inn. Suppose that in response to a $2.00 off sales promotion for spaghetti dinners, Joe finds that nightly dinner

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