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Module The Measurement and Calculation of Inflation KRUGMAN'S MACROECONOMICS for AP* 15 Margaret Ray and David Anderson.

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Presentation on theme: "Module The Measurement and Calculation of Inflation KRUGMAN'S MACROECONOMICS for AP* 15 Margaret Ray and David Anderson."— Presentation transcript:

1 Module The Measurement and Calculation of Inflation KRUGMAN'S MACROECONOMICS for AP* 15 Margaret Ray and David Anderson

2 What you will learn in this Module : How the inflation rate is measured What a price index is and how it is calculated The importance of the consumer price index and other price indexes

3 Aggregate Price Level Price Indexes and the Aggregate Price Level

4 Market Baskets and Price Indexes Market Basket

5 Market Baskets and Price Indexes Price Index Price Index in given year = Cost of market basket in a given year Cost of market basket in base year X 100 Inflation Rate = Price index in year 2 - Price index in year 1 Price index in year 1 X 100

6 The Consumer Price Index Consumer Price Index (CPI) What is it?

7 Other Price Measures Producer Price Index (PPI) GDP deflator Coincidence of inflation measures


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