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The Consumer Price Index - Assignment Example

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Subject: Macro & Microeconomics
Type: Assignment
Level: High School
Pages: 1 (250 words)
Downloads: 2
Author: chelseyziemann

Extract of sample "The Consumer Price Index"

Assignment Assignment Where a is the number of apples, x is the price of an apple, b is the number of oranges and y is the price of an orange. 2 The consumer price index refers to the changes in the cost of products over a specific period. Using the results obtained above, the CPI can be given as Taking initial price to be 100% ($6.75) and considered as a baseline for CPI 3 This percentage represents the percentage change in prices that cause the CPI to rise to 140.74% 4 5 The quantity of oranges and apples purchased won’t remain the same.

The above huge percentage changes in prices over a short period can be attributed to inflation or deflation, and this case represents typical inflation. Also, the large changes in CPI denote inflation or deflation. The above percentage increase represents the how the cost of living is affected by changes in CPI. Thus, changes in the consumer price index are used to assess changes associated with the cost of living as well as economic growth.

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