Economics - Unit 4 Lesson 2
Select FIVE general types of items that are included in the CPI basket.
- education - clothing - utilities - food - mortgages/rent
2010: CPI basket is $123.25. Today: CPI basket is $154.67. What is the CPI?
125.49
switching from takeout coffee to less-expensive soft drinks
commodity substitution effect
the tendency of people to respond to rising prices by buying cheaper substitutes of the particular good
commodity substitution effect
a measure of the amount of money required to buy a set list of basic goods—a market basket—in comparison to a base year
consumer price index
a decrease in prices due to decreased spending, which also leads to unemployment
deflation
failure to represent the greater value of new goods in the CPI index
new goods effect
installing a GPS unit in your automobile to replace paper maps
new goods effect
receiving a better value by purchasing items in an online auction
outlet substitution effect
the tendency to buy normal goods at reduced prices through places like outlet centers or online shopping
outlet substitution effect
the worth of a currency in relation to what it can buy
purchasing power
buying handmade French bread at a special bakery instead of the sliced white bread in a typical grocery store
quality change effect
failure to represent changes in the quality of goods in the CPI index
quality change effect
