Purchase Solution

CPI and a basket of goods

Not what you're looking for?

Ask Custom Question

We hear all the time about inflation and this thing called the CPI...

So, what is the CPI and a basket of goods?

Would you expect the same salary to work in each of these different cities: Denver, San Francisco, New York or Portland?

If not, please explain, think about the different things that you consume on a daily or weekly basis. To do this, pick 5 items that are common to each area, such as the price of gas, and create your own basket of goods and craft your initial response accordingly. Creativity counts here, so pick different items and demonstrate your understanding of the causes behind the differences.

The textbook for the class is Essentials of Economics 6th edition By Mankiw

Purchase this Solution

Solution Summary

The write up gives a learned discussion on CPI and a basket of goods

Solution Preview

Step 1
Consumer price index is a metric that calculates the price changes for each item in the predetermined basket of goods and averages them. The goods are assigned weights according to their importance. The CPI is used for identifying periods of inflation or deflation. The basket of goods is a fixed list of items used only to track inflation in the economy. In context of CPI, the basket is a list of consumer goods (c).

Step 2
I will not expect the same salary to work at Denver, Portland, San Francisco, and New York. The reason for this is that the level of inflation in each of these ...

Purchase this Solution


Free BrainMass Quizzes
Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media