Inflation Can Be Measured By Consumer Price Index Or Cpi

We’ve all heard the â€Å"Back in my day†, stories for our parents and grandparents enlightening us on the prices they used to pay for certain items. It’s hard to imagine a time when a bottle of Coke-a-Cola cost only fifty-cents. One may think, â€Å"That’s not true, you couldn’t possibly purchase anything for that cheap†. Although this seems impossible, prices fluctuate on a daily basis. This price fluctuation is known as inflation. Inflation is a continual escalation in the aggregate or general price level in an economy. In simpler terms, it means there is an increase in the cost of living and that your money might not buy as much today as it could in earlier times. To fully understand inflation one must know how it is calculated. Inflation can be measured by evaluating the Consumer Price Index or CPI. Doing so shows what the increase in general prices of a consumer’s â€Å"basket† are over a given amount of time. It can also be measured by looking at the real Gross Domestic Product or real GDP of an economy over time, that being the deflated nominal GDP. Our group will concentrate on the 1940’s, analyzing the changes of inflation before, during, and post-World War II. Our case study is titled The American Economy During The 1940’s. Our case study focuses on wage and price controls, rationing, WWII recovery, industrial production, household income, consumer costs, and monetary policy. The purpose of this case study is to take what we have learned in class and apply it to the UnitedShow MoreRelatedUsing A Supply And Demand Framework1439 Words   |  6 Pagesthe equilibrium price and quantity of a product (or service) of an increase in the number of consumers in the market. Using a supply and demand framework, I will examine the impact on the equilibrium price and quantity of a product (or service) of an increase in the number of consumers in the market. 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