Scarcity and Social Provisioning (2nd Ed.)

Learning ObjectivesBy the end of this section, you will be able to:Use the Consumer Price Index (CPI) to calculate U.S. inflation ratesIdentify several ways the Bureau of Labor Statistics avoids biases in the Consumer Price Index (CPI)Differentiate among the Consumer Price Index (CPI), the Producer Price Index (PPI), the International Price Index, the Employment Cost Index, and the GDP deflator.The most commonly cited measure of inflation in the United States is the Consumer Price Index (CPI). Government statisticians at the U.S. Bureau of Labor Statistics calculate the CPI based on the prices in a fixed basket of goods and services that represents the purchases of the average family of four. In recent years, the statisticians have paid considerable attention to a subtle problem: that the change in the total cost of buying a fixed basket of goods and services over time is conceptually not quite the same as the change in the cost of living, because the cost of living represents how much...