Week 3: Cost of Living §

(F) Day of the week: Friday Class: IS206 Created Time: March 13, 2020 4:23 PM Database: Class Notes Database Date: March 13, 2020 4:23 PM Days Till Date: Passed Last Edited Time: June 9, 2021 10:42 AM Type: Lecture

Consumer Price Index §

1. Fixed Basket of Goods:

   Find the average Quantity of each products to put as the constant Quantity

2. Find the Price of each good in each year

3. Find the Cost of Basket (Sum of PxQ)

   Change happens due to change in price, not change in quantity

$$CP{I}_t=\frac{CostBaske{t}_t}{CostBaske{t}_B}\times 100$$ $$Inflatio{n}_{(t,t+1)}=\%\Delta CPI=\frac{CP{I}_{t+1}-CP{I}_t}{CP{I}_t}$$