Inflation is a measure of how
prices have changed over time. If prices are changing due to inflation,
each dollar spent will buy less.
In order to answer the questions below, go to the following website:http://www.bls.gov/cpi/
Questions:
1.
What is inflation? What are
the causes of inflation? Is inflation desirable and what can be done to
control inflation in a market economy?
2.
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.
3.
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.
4.
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.
5.
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?
6.
What are the implications of
these measures for government economic policies?
