Describe about price level and time, Macroeconomics

Assignment Help:

Q. Describe about Price level and time?

We are hardly interested in the value of price level at a certain point in time. What we are interested in is percentage change in the price level between two points in time.

We evaluate the percentage change by first creating a basket of services andgoods. At regular intervals (generally once a month on the first day of the month) we measure all prices of the contents of the basket (characteristically as an average of the market) and evaluate the price level. In this way, we would end up with a time series of price levels - one value for each month.

Using this time series we can study how price level progresses over time. If all prices rose by 2% during one month, price level would rise by exactly 2%. If one of the prices rose by 2% whereas the other prices remained unchanged, price level would rise, though by much less than 2%. Exactly how much it would rise will depend on the weight of changed price.

Imagine that we have created a particular basket of services and goods. We evaluate the price level at 4 different points in time during 2008 without changing content of basket (weights are unchanged). Assume that we find the below time series for the price level:

Point in time

Jan 1, 2008

Feb 1, 2008

March 1, 2008

April 1, 2008

Price level

60 770

62 400

62 850

62 850


Related Discussions:- Describe about price level and time

Explain the term production function in the economics, Explain the term pro...

Explain the term production function in the economics. Production Function A production function is the association between the quantity of inputs a firm utilizes and the qu

Calculate the value of a maximum flow, The following network N has sourc...

The following network N has source S and sink T with arc capacities as shown. (a) Use the maximum flow algorithm to find a maximum flow from S to T and draw a diagram

Opportunity Costs, Comparative if Person can make 15 wristbands and hour an...

Comparative if Person can make 15 wristbands and hour and 3 potholders. What is the comparative advantage? If same person works 20 hours a week graph the possible combinations sh

TAXATION, What is Inherent Limitation?

What is Inherent Limitation?

What is causing the rise in the price of oil, The rise in the price of oil ...

The rise in the price of oil can be traced to a easy factor, but there are various other contributing factors. The easiest explanation is that the demand for oil is greater than

Major economic indicators, Discuss the three major economic indicators and ...

Discuss the three major economic indicators and how they are indicative of our current economic climate.

Notion of the hidden momentum of population growth, Explain the notion of t...

Explain the notion of the hidden momentum of population growth. Why is this an important concept for projecting future population trends in different developing nations?

Economic growth and economic development, #question.distinguish between eco...

#question.distinguish between economic growth and economic development.

Probabilities, Compute the following probabilities a) If Y is distribute...

Compute the following probabilities a) If Y is distributed N(1,4) find Pr(y ? 3) b) If Y is distributed N(3,9) find pr(y>0) c) If Y is distributed N (50,25) find pr(40?Y?5

Income and substitution effects of a price change, Income and Substitution ...

Income and Substitution Effects of a Price Change Indifference curve analysis can be used to separate the income effect (IE) from substitution effect (SE). This is shown in Fig

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