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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

How do economists use a basket of goods and services to measure the price level?

To determine

The method economists use to measure the price level through the basket of goods and services.

Explanation

For calculating the price level, economists came up with the concept of a basket of services and goods, which consists of different items businesses, organizations, or individuals generally buy. In this method, economists closely observe the way prices of those items change over time.

A lot of people end up calculating the average of the prices, which makes this calculation tricky as well as misleading. This miscalculation clearly defeats the purpose as some products matter more than others...

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