Vocabulary: index number, CPI, inflation
Assignment: Read section 3D pages 177-190 Do exercises 1,2,3,4,7,12,16,19,32,37
Notes:
1. An index number provides a simple way to compare measurements made
at different times or in different places
index number = value/reference value
*100
2. Consumer Price Index (CPI) is based on an average of prices in a sample of more than 60,000 goods services and housing costs. It is computed and reported monthly.
3. Rate of inflation from year to year is usually defined as the relative change in the CPI
4. There are other index numbers you will see in the news.
Skills to be mastered in this section:
1. Compute price index numbers
2. Compute costs of goods in various years.