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Macroeconomic that will help you understand more and help the country by understanding the topic well. Other than that, it also emphasizes in the stability of the country's economical state. Food security as well no poverty plays a huge part in the balance of the economic state of the country.
measuring the cost of living
Consumer Price Index
How the CPI Is Calculated
Problems with the CPI
Contrasting the CPI and GDP Deflator
Correcting Variables for Inflation:
Examine the composition of national income (or national output);
Study the concepts of Gross National Product (GNP) and Gross Domestic Product (GDP), and differentiate between the two measures;
Look at the two approaches to measuring GDP and GNP;
Learn the differences between real and nominal output: and
Learn what economists use to determine whether the national economy is growing or not.
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The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
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We all have good and bad thoughts from time to time and situation to situation. We are bombarded daily with spiraling thoughts(both negative and positive) creating all-consuming feel , making us difficult to manage with associated suffering. Good thoughts are like our Mob Signal (Positive thought) amidst noise(negative thought) in the atmosphere. Negative thoughts like noise outweigh positive thoughts. These thoughts often create unwanted confusion, trouble, stress and frustration in our mind as well as chaos in our physical world. Negative thoughts are also known as “distorted thinking”.
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2. 2.) CPI – measuring Inflation
Inflation:
4.) Causes of Inflation
1.) Inflation Vocabulary
5.) Consequences of Inflation
3.) Problems of CPI
Part 1
Part 2
Part 3
3. - a sustained increase in the cost of living or
the general price level leading to a fall in
the purchasing power of money.
Inflation
- is measured by the annual percentage
change in consumer prices.
Rate of
Inflation
***Please remember
that a fall in the
rate of inflation is
not the same thing
as a fall in prices!
1.) Inflation Vocabulary
4. - when the rate of inflation becomes
negative.
Deflation
- the value of money becomes worthless.Hyperinflation
1.) Inflation Vocabulary
Stagflation - persistent high inflation combined with high
unemployment and stagnant demand in a
country's economy.
5. Stagflation was a big problem
in the US and other western
countries in the 1970s
6. It was mostly caused my gas
and raw material prices were
high causing high prices and
high unemployment.
7. 1920’s Germany had this
hyperinflation problem where the
money basically became worthless
caused by a bad economic policy after
losing world war one.
8. {
1946 Hungry Hyperinflation At the height of the
inflation, prices were rising at the rate of 150,000% PER DAY. By
then, the government had stopped collecting taxes altogether
because even a single day’s delay in collecting taxes wiped out the
value of the money the government collected.
11. 2.) CPI – measuring Inflation
Inflation:
4.) Causes of Inflation
1.) Inflation Vocabulary
5.) Consequences of Inflation
3.) Problems of CPI
12. - measures the typical consumer’s cost of
living with only the typical things that are
purchased.
- the main way to measure inflation.
Consumer Price
Index (CPI)
1.) Inflation Vocabulary
13. How the CPI Is Calculated:
- Government surveys consumers to
determine what’s in the typical consumer’s
“shopping basket.”
2.) CPI – measuring Inflation
1.) Fix the “basket”
- Government then collects data on the
prices of all the goods in the basket.
2.) Find the prices
3.) Compute the
basket’s cost
-Use the prices to
compute the total cost of
the basket.
14. How the CPI Is Calculated:
- The CPI in any year equals:
2.) CPI – measuring Inflation
4.) Choose a base year and compute the index
100 x
cost of basket in current year
cost of basket in base year
- The percentage change in the CPI from the preceding period:
6.) Compute the inflation rate
CPI this year – CPI last year
CPI last year
Inflation
rate
x 100%=
5.) ?
15. CPI basket:
{4 比萨, 10 饺子}
120元 x 4 + 3元 x 10 = 510
110元 x 4 + 2.5元 x 10 = 465
100元 x 4 + 2元 x 10 = 440
cost of basket
3.00元
2.50元
2.00元
price of
饺子
120元2013
110元2012
100元2011
price of
比萨
year
Compute CPI in each year
2011: 100 x (440/440) = 100
2012: 100 x (465/440) = 106
2013: 100 x (510/440) = 116
using 2011 base year:
CPI – example…
x4
x10
Inflation rate:
6%
106– 100
100
x 100%=
9.4%
116– 106
106
x 100%=
16. CPI basket:
{10 kg beer, 20 kg coffee}
The CPI basket cost $1050
in 2009, the base year.
A. Compute the CPI in 2010.
B. What was the CPI inflation rate from 2010-2011?
price of
beer
price of
coffee
2009 $35 $35
2010 $40 $40
2011 $65 $50
CPI – another example…
x10
x20
Questions to try:
17. CPI basket:
{10 kg beer, 20 kg coffee}
The CPI basket cost $1050
in 2009, the base year.
price of
beer
price of
coffee
2009 $35 $35
2010 $40 $40
2011 $65 $50
CPI – another example…
x10
x20
A. Compute the CPI in 2010:
Cost of CPI basket in 2010
= ($40 x 10) + ($40 x 20) = $1200
CPI in 2010 = 100 x ($1200/$1050) = 114
18. CPI basket:
{10 kg beer, 20 kg coffee}
The CPI basket cost $1050
in 2009, the base year.
price of
beer
price of
coffee
2009 $35 $35
2010 $40 $40
2011 $65 $50
CPI – another example…
x10
x20
B. What was the inflation rate from 2010-2011?
Cost of CPI basket in 2011
= ($65 x 10) + ($50 x 20) = $1650
CPI in 2011 = 100 x ($1650/$1050) = 157
CPI inflation rate = (157 – 114)/114 = 38%
19. 2.) CPI – measuring Inflation
Inflation:
4.) Causes of Inflation
1.) Inflation Vocabulary
5.) Consequences of Inflation
3.) Problems of CPI
2.1) Weighting
20. 2.1) Weighting CPI
- measures the typical consumer’s cost of
living with only the typical things that are
purchased.
Consumer Price
Index (CPI)
- in which each item
influences the index in
proportion to its price per
it’s share.
Weighted Index
AS exams love to
mention this, so please
don’t forget it!
21. Different items in the
basket will
proportional be
counted as worth more
or less then other items.
22. Types of G &S
Proportion
spend by
households
Average price of
goods
Weighted average
price
Clothing 25 $40 0.25 x $40 = $10
Entertainment 15 $60 0.15 x $60 = 9
Food 40 $5 0.40 x $5 = $2
Travel 20 $20 0.20 x 20 = $4
2.1) Weighting CPI
Total = 100% Price of basket = $25
The proportion of total spending on each
category is used to weigh the average prices of
each good to find their weighted averages.
Let’s call this the base year…
Base Year5.) Attach
the weights
23. Types of G &S
Proportion
spend by
households
Average price of
goods
Weighted average
price
Clothing 25 $44 0.25 x $44 = $11
Entertainment 10 $90 0.10 x $90 = 9
Food 50 $8 0.50 x $8 = $4
Travel 15 $20 0.15 x 20 = $3
2.1) Weighting CPI
Total = 100% Price of basket = $27
Prices have changed, but so has the weighted
proportion of some items.
Current Year
100 x
Weighted average prices in current year
Weighted average prices in base year
$27
$25
CPI = 108=
5.) Attach
the weights
24. 2.) CPI – measuring Inflation
Inflation:
4.) Causes of Inflation
1.) Inflation Vocabulary
5.) Consequences of Inflation
3.) Problems of CPI
25. 3.) Problems of CPI
*** The general problem is that CPI
tends to overstate the actual increase
in the cost of living.
- Introduction of New Goods
- Substitution Bias
- Unmeasured Quality Change
- Discount sales
26. 3.) Problems of CPI
Substitution Bias - Over time, some prices rise
faster than others.
- Consumers substitute
toward goods that become
relatively cheaper.
- The CPI misses this
substitution because it uses
a fixed basket of goods.
偏见
Example:
You stop buying beef (in the CPI
basket) and buy lamb instead, (not in
the CPI basket) hard to know and
measure why people make these
choices and if they choice something
not in the basket.
27. 3.) Problems of CPI
Introduction of
New Goods
- The introduction of new
goods increases variety, allows
consumers to find products
that more closely meet their
needs.
-
- -The CPI misses this effect
because it uses a fixed basket
of goods.
Example:
You buy more Mini Ipads (not in the
basket) because they are new and
cheap, but since they are new they
can’t already be in the basket yet.
28. Everyone has a smart phone today, but
they did not exist 15 years ago, so when
should the government decide to put it
in the basket?
29. 3.) Problems of CPI
Unmeasured
Quality Change
- Improvements in the quality of
goods in the basket increase the
value of each dollar.
- The CPI tries to account for
quality changes but probably
misses some, as quality is hard to
measure.
Example:
Many electronic products today are
cheaper and better quality then in the
past, how to measure that?
30. Phones today are better and cheaper than
older phones, hard to measure this in
monetary terms.
31. 3.) Problems of CPI
- Firms may decrease prices
due to overstock or misreads of
the market.
-The CPI may not compensate
for these short term changes.
Discount sales
Example:
Stores often have sales, how can the
government keep track of all the prices
in the whole country when many places
have discounts and others don’t?
32. Prices online are much cheaper usually
right? So how to measure it exactly if
you’re the government?
34. - a sustained increase in the cost of living or
the general price level leading to a fall in
the purchasing power of money.
Inflation
- is measured by the annual percentage
change in consumer prices.
Rate of
Inflation
1.) Inflation Vocabulary
- when the rate of inflation becomes
negative.
Deflation
- the value of money becomes worthless.Hyperinflation
- ………………………….hless.Stagflation
35. - measures the typical consumer’s cost of
living with only the typical things that are
purchased.
- the main way to measure inflation.
Consumer Price
Index (CPI)
1.) Inflation Vocabulary
36. How the CPI Is Calculated:
- Government surveys consumers to
determine what’s in the typical consumer’s
“shopping basket.”
2.) CPI – measuring Inflation
1.) Fix the “basket”
- Government then collects data on the
prices of all the goods in the basket.
2.) Find the prices
3.) Compute the
basket’s cost
-Use the prices to
compute the total cost of
the basket.
37. How the CPI Is Calculated:
- The CPI in any year equals:
2.) CPI – measuring Inflation
4.) Choose a base year and compute the index
100 x
cost of basket in current year
cost of basket in base year
- The percentage change in the CPI from the preceding period:
6.) Compute the inflation rate
CPI this year – CPI last year
CPI last year
Inflation
rate
x 100%=
5.) ?
38. 2.1) Weighting CPI
- measures the typical consumer’s cost of
living with only the typical things that are
purchased.
Consumer Price
Index (CPI)
- in which each item
influences the index in
proportion to its price per
it’s share.
Weighted Index
39. {
Types of G &S
Proportion
spend by
households
Average price of
goods
Weighted average
price
Clothing 25 $44 0.25 x $44 = $11
Entertainment 10 $90 0.10 x $90 = 9
Food 50 $8 0.50 x $8 = $4
Travel 15 $20 0.15 x 20 = $3
2.1) Weighting CPI
Total = 100% Price of basket = $27
Prices have changed, but so has the weighted
proportion of some items.
Current Year
100 x
Weighted average prices in current year
Weighted average prices in base year
$27
$25
CPI = 108=
5.) Attach
the weights
40. 3.) Problems of CPI
*** The general problem is that CPI
tends to overstate the actual increase
in the cost of living.
- Introduction of New Goods
- Substitution Bias
- Unmeasured Quality Change
- Discount sales