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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Explain briefly what the CPI measures and how it is constructed.Identify one reason why the CPI is an imperfect measure of the cost of living.

To determine

CPI and its measurement.

Explanation

The consumer price index measures the overall changes in the cost of basket of goods and services bought by a typical consumer in the economy.

The CPI is constructed by surveying consumers to determine the basket of goods and services that the typical consumer buys; then the cost of market basket is computed relative to the cost of the same basket in the base year...

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