1 of 30

Slide Notes

DownloadGo Live

Measuring price stability: CPI

Published on Nov 22, 2015

No Description

View Outline

MORE DECKS TO EXPLORE

PRESENTATION OUTLINE

1.

Measuring price stability: CPI

mr. Melkonian
Photo by [ embr ]
2.

maintain price stability

one of the main goals of the government
Photo by infomatique
3.

if i paid $1 for this grape today

now it's $2... implication?
Photo by mynameisharsha
4.

inflation

persistent rise in general level of prices
Photo by zzathras777
5.

prices tend to increase a little

every year
Photo by Juliana Coutinho
6.

Reasons for inflation

  • Increased consumer demand
  • Increase in prices of resources
7.

Consumer Price Index (cpi)

tracks inflation (stats can does this)
Photo by www.cobude.sk
8.

CPI is a price index that measures the changes in the prices of consumer goods

Photo by Steve Rhodes
9.

impossible to track everything

'representative basket' of stuff monitored instead
Photo by Robert Bejil Productions
10.

households defined as

urban, four family members
11.

Stuff we spend money on

12.

primary function of cpi

calculate inflation rate
Photo by viralbus
13.

(cpi y2 - cpi y1) / cpi y1

Photo by nicodds
14.

how is cpi useful to govt. and unions?

judge how wage/pension pay should be adjusted (indexing)
Photo by Stuck in Customs
15.

price of grapes went up to $2

adjust your salary so you can afford the grape proportionately like before
Photo by Darwin Bell
16.

cpi limitations

Photo by Ardonik
17.

category weightings

does everyone really spend that much on alcohol? maybe shift depending?
Photo by anieto2k
18.

family size

not everyone is a family of four - change spending priority?
Photo by ROSS HONG KONG
19.

individual items in base year basket

phones
Photo by cambodia4kidsorg
20.

cultural diversity

different cultures spend differently
Photo by Stuck in Customs
21.

inflation is an issue for gdp

how much are we growing strictly due to price increases?
Photo by "The Wanderer's Eye Photography"
22.

grape sold for $2 instead of $1

gdp doubled... right?
Photo by Chris Campbell
23.

but we're only producing one grape..

Photo by SummerTomato
24.

gpd deflator

fixes this problem
25.

nominal gdp

current dollar GDP (money GDP)
Photo by ryoki
26.

Total value of output of an economy before the effect of price increases is removed.

Photo by Photography by Christopher Schmid
27.

real gdp

factoring the removal of deflation
Photo by Alex E. Proimos
28.

fisher volume index used now

does the same thing, more accurate 
Photo by Swallowtail Garden Seeds
29.

problem with rgdp

use of a base year - worked well in 70s and 80s... rapid expansion not any more
30.

Untitled Slide

Peter Melkonian