Measurement of inflation, Managerial Economics

Measurement of Inflation

The rate of inflation is measured using the Retail Price Index.  A retail Price Index aims to measure the change in the average price of a basket of goods and services that represents the consumption pattern of a typical household.  It estimates the change in the cost to consumers of a range of commodities that they typically buy.  It is usually prepared for different classes of consumers and for different areas. 

The calculation of the index requires:

  • Selection of commodities to be included in the consumers basket
  • Selection of the base period weights for each commodity
  • Date on prices of the commodities in the current period and in the base period

Such an index then estimates the cost of living or the purchasing power of incomes. If the index increases by 10% in a given period, wages would need to rise by 10% for purchasing power to remain constant.  It is in this regard that trade unions and workers demand that wages should increase pari-passu with the cost of living index.

Posted Date: 11/30/2012 4:43:14 AM | Location : United States







Related Discussions:- Measurement of inflation, Assignment Help, Ask Question on Measurement of inflation, Get Answer, Expert's Help, Measurement of inflation Discussions

Write discussion on Measurement of inflation
Your posts are moderated
Related Questions
Disposable Income This is the income which households actually have available to spend or to save.  To calculate disposal income, which is indicated by Ya, the statistician mu

Frank H. Knight treated profit as a residual return to uncertainly profit. Obviously knight made a distinction between risk and uncertainly he divided risk into calculable and non-

with the of evidence comprehensively discuss the market structure in the south African mobile telecommunications industry

The Economics of Population Population issues became matters of economic concern when it became increasingly apparent that the problem of excess population may be a serious ob

williamson''s model describe

Factors affecting the size of  National Income The size of nation's income depends upon  the quantity and quality of the factor endowments at its disposal. A nation will be ri

The production function can have many uses. It can be used to compute least-cost factor combination for a given output or maximum output combination for a given cost. Knowledge of

Q. What is Production and Cost Function? Production functions and cost functions are the keystones of managerial and business economics. A production function is a mathematical

TRADE UNIONS Trade unions are workers' organizations whose objective is to protect the interests of their members. Functions i.       To bargain on behalf of their mem

REMEDIES FOR UNEMPLOYMENT The measures appropriate as remedies for unemployment will clearly depend on the type and cause of unemployment.  Broadly they can be divided into: