ECO 205 Week 7 CheckPoint Calculation of the Consumer Price Index

ECO 205 Week 7 CheckPoint Calculation of the Consumer Price Index
The Consumer Price Index (CPI) is a measure of the overall cost of the goods and services bought by a typical consumer.  Each month, the Bureau of Labor Statistics follows five steps to calculate Consumer Price Index. Complete the following questions:

·         List the five steps that the BLS follows to calculate the CPI.

·         Explain the three problems associated with the calculation of the CPI.

·         The fifth step of calculating the CPI computes the inflation rate.  The inflation rate is a very important measure of how well our economy is doing.  Answer the following questions:

*   Suppose the inflation rate is 4% (per year) and your income increases by 6% (per year).  Are you better or worse off?  Explain.

*   Suppose the inflation rate is 8% (per year) and your income increases by 6% (per year).  Are you better or worse off?  Explain.

·         Format your paper according to APA standards.
·         Post your essay as a Microsoft© Word attachment.

Please note:  You will not use Appendix D to complete your checkpoint.