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Decoding CPI: The Economic Thermometer for Inflation & Deflation Analy
Chapter 9, Problem 7(choose chapter or problem)
What is the Consumer Price Index (CPI), and how is it determined each month? How does the Bureau of Labor Statistics calculate the inflation rate from one year to the next? How does inflation affect the purchasing power of a dollar? How does it explain differences between nominal and real interest rates? How does deflation differ from inflation?
Questions & Answers
QUESTION:
What is the Consumer Price Index (CPI), and how is it determined each month? How does the Bureau of Labor Statistics calculate the inflation rate from one year to the next? How does inflation affect the purchasing power of a dollar? How does it explain differences between nominal and real interest rates? How does deflation differ from inflation?
ANSWER:Step 1 of 3
Consumer Price Index (CPI)
A Consumer Price Index estimates changes in the price level of a weighted normal market bushel of consumer merchandise and enterprises bought by family units.