Consumer Price Index
EC 601 – Fall 2010
December 3, 2010
Consumer Price Index (CPI) According to Mankiw the Consumer Price Index is a measure of the overall cost of the goods and services bought by a typical consumer. The Department of Labor’s subordinate branch the Bureau of Labor who is in charge of providing the Consumer Price Index of states that the Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a “market basket” of consumer goods and services. Some background into how the Consumer Price Index came about. The Consumer Price Index was initiated during World War I, when rapid increases in prices, particularly in shipbuilding centers, made an index
…show more content…
If a consumer buys one product over another because of a price hike in the first product, chain-weighted figures will capture this buying shift, while Core CPI will not (Barnes, n.d.). Core CPI will continue measuring the price of the good as it rises, regardless of whether fewer people are purchasing the product (Barnes, n.d.). The CPI represents all goods and services purchased for consumption by the reference population (U or W) BLS has classified all expenditure items into more than 200 categories, arranged into eight major groups ("Consumer price index," 2010). Major groups and examples of categories in each are as follows: • FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks) • HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture) • APPAREL (men's shirts and sweaters, women's dresses, jewelry) • TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance) • MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services) • RECREATION (televisions, toys, pets and pet products, sports equipment, admissions); • EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories); • OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and
Services are provided through various health clinics, hospitals, schools, community centers, and public housing centers. In the United
offering a wide range of health services such as health education, prevention of diseases, treatment and other social benefits.
They are: prescription drugs, medical care or remedial care furnished by other licensed practitioners for example nurse practitioners/certified nurse specialist, certified registered nurse anesthetist, physician assistants, psychology, licensed professional counselors, licensed marriage and family therapist, licensed clinical social workers, podiatry, chiropractic, optometry, including eyeglasses and contacts (Hegar). Rehabilitation and other therapies: mental health rehabilitation, rehabilitation facility services, substance use disorder treatment, physical, occupational and speech therapy (Hegar). Clinic service: maternity service clinics, hearing instrument and related audiology, and renal dialysis (
2. The Bank of Canada is interested in core inflation because compared to inflation, core inflation exclude food, energy and those products with a unstable price. Core inflation as a measure of inflation for policy purposes, it measures inflation more precisely. Core inflation represents the long run trend in the price level. Compared to CPI, core inflation is generally lower because it tries to maintain the price as it avoids high inflation and deflation over time.
3. What is the Producer Price Index (PPI)? Producer Price Index (PPI) is an economic index that keeps track of the cost of production or wholesale prices for certain goods and services (What Is a Producer Price Index?).
Prices change because of the economy. Inflation is represented as a rise in the general price level. For example, prices of many goods and services such as housing, apparel, food, transportation, and fuel must be increasing in order for inflation to occur in the overall economy. If prices of just a few types of goods or services are growing, there isn’t necessarily inflation. Demand-Pull Inflation and Cost-Push In cause an increase in the overall price level within an economy. The Federal Reserve carried an informal inflation goal over a long period, only making its policy official in January of 2012, when it announced that it thought a policy which targets a 2% rate of inflation "is most consistent over the longer run with the Federal Reserve's statutory
We have two primary care doctors available to see patients for any of their medical needs. We have a dental program set up for families that need it. We provide immunizations for school age children. Perform school physicals.
Consumer income can be defined as the income that is left over after taxes, and living expenses are met. This money can also be classified as disposable income, and companies are
Inflation is the sustained increase in the general level of prices for goods and services in a county, and is measured as an annual percentage change. (Investopedia) During periods of inflation, the prices of products and services will rise. There are several reasons why an economy would see a rise in inflation. Decrease in supplies, corporate deciding to charge more, and consumer confidence are some of the reasons why an economy would see the inflation rate increase. Consumer confidence is when consumers gain more confidence in spending due to a low unemployment rate and wages being stable. Decrease in supplies is when consumers are willing to pay more for a product or service is that is slowly becoming unavailable due to a decrease in supplies. Corporate decisions are when the corporations basically decide
Financing health services in the United States is very important and involves an excessive amount of health institutions and activities. Health services are supported by several methods to create revenue that most hospital, clinics, and treatment centers use for daily operational costs (World Health Organization, 2006). These methods are: general taxation of the state, county, or township/municipality, Medicare or Medicaid or other socialized health insurance plans, voluntary and private health insurance and lastly, donations to health charities accepted from non-profit organizations, donations
Also, the consumer price index measurements can be used to forecast the future economic prices. Hence, the company will use the suitable environment to achieve its goal of maximizing profits and also minimizing the costs.
Grocery stores tend to make their own market brand products because of high priced retail products. These "market-brand " products are sold at a cheaper price, which helps the wallet wary shoppers. The wholesale price index (WPI) has been negatively impacted by inflation. Wholesale price index measures and tracks the changes in prices that retailers pay for finished goods. Inflation only becomes negative when it goes beyond 5.5%. Inflation should be reduced to aid more shoppers in the U.S.
Consumerism is a phenomenon that has been dominant in all societies for an extremely long time. It causes people to excessively purchase goods and consume things excessive to their actual needs. “A consumer is a person or thing that consumes” (Dictionary.com). Consumerism can be defined as a belief that an expanding consumption of goods is an advantage to the county’s economy. Today people are practically brainwashed to buy more than what they need in order to keep the economy afloat. No one thinks twice about why they are buying things or maybe even what they need. Consumerism has a big impact on our country, good or bad.
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.
Price elasticity of demand is an economic measure that is used to measure the degree of responsiveness of the quantity demanded of a good to change in its price, when all other influences on buyers remain the same.