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Price Level & inflation   Definition of the Consumer Price Index and the GDP deflator Calculation of price index...

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Economics

Price Level & inflation

  •   Definition of the Consumer Price Index andthe GDP deflator

  • Calculation of price index (e.g., CPI, GDPdeflator)

  • Calculation of inflation (Note: inflation is the rate ofchange in a price index from one year to another)

  • Limitation of the CPI (e.g., commodity substitutionbias, quality bias, new goods bias, outlet substitutionbias)

Answer & Explanation Solved by verified expert
3.6 Ratings (291 Votes)
CPI or consumer price index is a price index which calculates changes in price level of an average market basket of goods consumed by a consumer GDP deflator measures price changes of all new domestically    See Answer
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