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

IS-lm model, Derive the following equilibrium for the IS-LM model:

Derive the following equilibrium for the IS-LM model:

Negative outflow to the u.s. balance, A negative outflow to the U.S. balanc...

A negative outflow to the U.S. balance of payments is generated by the purchase of United States assets (such as United States Treasury bonds) by foreign investors and the sale of

Production function and growth, Q. Production function and Growth? From...

Q. Production function and Growth? From the simple production function Y = f(L, K), we can classify three sources of growth:  An increase in L. An increase in K.

Explain the money market diagram, Q. Explain the Money market diagram? ...

Q. Explain the Money market diagram? Let's begin by studying the money market when GDP is given. When Y is given, MD will only rely (negatively) on R and we can draw a figure w

Walmarts website, Over the past month, the 500 customers have downloaded th...

Over the past month, the 500 customers have downloaded the following number of songs from WalMart's website (obviously, they have had more, but we need to use workable numbers): 13

What factors find out the price elasticity of demand, What factors find out...

What factors find out the price elasticity of demand? Factors which determine the price elasticity of demand are: a. Whether close substitutes are accessible b. Whether t

Right to give blood, Singer suggests that although the right to sell blood ...

Singer suggests that although the right to sell blood does not threaten the formal right to give blood, it is incompatible with "the right to give blood, which cannot be bought, wh

How does outsourcing affect the economy, In principle, outsourcing makes th...

In principle, outsourcing makes things a little inexpensive and enhance profitability. Though, some things require to be done 'in house'. For example, some employers (largely) outs

Var model, The estimated statistics from the VAR model are not able to be i...

The estimated statistics from the VAR model are not able to be interpreted to solve the problem of this coursework due to reasons that are discussed in the next subchapter. Therefo

Major tenets of kant''s ethical theory, Please answer the question below re...

Please answer the question below relating it to BUSINESS in today's world. What are the major tenents of the ethical theory of Utilitarianism, and how would this theory be appli

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