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How the consumer price index (CPI) is constructed and why it is an imperfect measurement of...

How the consumer price index (CPI) is constructed and why it is an imperfect measurement of the cost of living.

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How the consumer price index (CPI) is constructed and why it is an imperfect measurement of the cost of living?

The consumer price index (CPI) is a measure of the overall cost of the goods and services bought by a typical consumer. It is used to monitor changes in the cost of living over time.

When the CPI rises, the typical family has to spend more dollars to maintain the same standard of living.

Inflation refers to a situation in which the economy’s overall price level is rising. The inflation rate is the percentage change in the price index from the preceding period.

The CPI is an accurate measure of the selected goods that make up the typical bundle, but it is not a perfect measure of the cost of living.

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