Determine the problems there with consumer price index, Macroeconomics

Assignment Help:

Determine the Problems evolved with Consumer Price Index

To illustrate problems involved in calculating CPI we consider MP3 players. If you measure average price of MP3 players at two points in time, let's say one year apart, you may find that average price hasn't changed.

Though, this isn't whole story as products on the market would have changed. Essentially, the products at later measurement are more advanced than products at the first measurement. If you were to compare prices of MP3 players with same performance, you will probably find that prices have fallen. Without adjusting for changes in quality and performance, you will generally overestimate the rise in price index.

 


Related Discussions:- Determine the problems there with consumer price index

Alternaria toxins, Several species of Alternaria (A. citri, A. alternata, ...

Several species of Alternaria (A. citri, A. alternata, A. solani and A. tenuissima) produce toxic substances that have been found in apples, tomatoes, blueberries and others. The

Explain the consumer prices index, Consumer Prices Index Two economic ...

Consumer Prices Index Two economic indices learnt at AS are the Consumer Prices Index (CPI) and the Retail Prices Index (RPI). Both are used to calculate the average price lev

Two banks for financing, You decide to buy a home for $1,000,000. You appro...

You decide to buy a home for $1,000,000. You approach two banks for financing. The first requires a 10% down payment and requires monthly payments on a 20 year mortgage sufficient

Increase in its expenditures by selling bonds to the public, If a governmen...

If a government finances an increase in its expenditures by selling bonds to the public, then the aggregate demand curve will: A. not shift. B. shift out more if crowding out occur

Calculate the overall efficiency and operating cost, A company is consideri...

A company is considering investing in power generation. It wants to setup a 1000 MW power generation system. The company hired you as a consultant to explore different options for

Difference between accounting profit and economic profit, What is the diffe...

What is the difference between accounting profit and economic profit? Accounting Profit: The accounting profit of a business is the revenue of business minus the explicit

Proctor and gamble, Bayer Schering Pharma AG, Germany owns the Alka-Seltzer...

Bayer Schering Pharma AG, Germany owns the Alka-Seltzer, which was launched in 1931 and was meant for relief of minor aches, pains, inflammation, fever, headache, heartburn, sour s

Calculate the nominal gdp, Answer the following questions for a hypothetica...

Answer the following questions for a hypothetical economy whose situation in year 1 was as follows: M = $800 billion; long-term annual growth of real GDP = 3%; V = 4. The bankin

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd