Inflation is a measure of how prices have changed over time. If prices are changing due to inflation, each dollar spent will buy less.
Questions:
- What is inflation? What are the causes of inflation? Is inflation desirable and what can be done to control inflation in a market economy?
- What is the Consumer Price Index (CPI)? How has the CPI behaved since the year 2000? What have been the causes of these changes? In your response, include a graph of the CPI for this period and cite your source.
- What is the Producer Price Index (PPI)? How has the PPI behaved since the year 2000? What have been the causes of these changes? In your response, include a graph of the PPI for this period and cite your source.
- What is the Consumer Expenditure Survey (CE)? How has the Survey behaved since the year 2000? What have been the causes of these changes? In your response, include a graph of the CE for this period and cite your source.
- What do the measures above tell us about consumer behavior? Have incomes changed enough to offset the inflation since 2000? What can we predict about future inflation?
- What are the implications of these measures for government economic policies?
In order to answer the questions below, go to the following website: http://www.bls.gov/cpi/
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