Explain the problem involved in consumer price index, Macroeconomics

Assignment Help:

Q. Explain the problem involved in consumer price Index?

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

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


Related Discussions:- Explain the problem involved in consumer price index

Exchange rate, what are the types of exchange rate

what are the types of exchange rate

GDP, 1 ) GDP ...

1 ) GDP Consumption 240 244 250

Pigou effect, The Pigou effect: A) suggests that as prices fall and real...

The Pigou effect: A) suggests that as prices fall and real money balances rise, consumers should feel less wealthy and spend less. B) suggests that as prices fall and real mo

Firms in the circular flow, We divide all firms into 3 categories: FR inclu...

We divide all firms into 3 categories: FR includes all firms which acquire raw material (iron ore, farm products and so on), FH all those that produce semi-manufactured goods (stee

National income, # ???? .. difference between gdp at market price and nnp...

# ???? .. difference between gdp at market price and nnp at factor cost

Help needed, what are the advantages and disadvantages of unemployment

what are the advantages and disadvantages of unemployment

Reducing the budget deficit, Reducing the budget deficit by cutting governm...

Reducing the budget deficit by cutting government spending could conceivably: A. increase income if interest rates rise enough and government spending is more productive than priva

Homework, Using a flexible exchange rate system with imperfect capital mobi...

Using a flexible exchange rate system with imperfect capital mobility explain the impact that an open economy has on the effectiveness of monetary and fiscal policy. 2. Using a fl

Inflation unemployment trade off under adaptive expectations, Explain how i...

Explain how inflation unemployment trade off is not feasible under adaptive expectations?

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