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2 cards from this section. Quick, good the night before a test.
What does CPI measure?
Think about consumer spending.
Name one method to calculate the CPI.
What method uses base year quantities?
What does CPI stand for?
Think about what it tracks.
True or False: The Paasche index uses base year quantities.
Remember which method adjusts to current prices.
Calculate the CPI given the following prices for a basket over two years: Year 1 (10 items at $2 each) Year 2 (10 items at $2.5 each).
Use the CPI formula: (Current Year Cost / Base Year Cost) × 100.
Discuss the implications of a rapidly increasing CPI for small businesses.
Consider how consumers react to price changes.
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