Project II Modeling Exponential Functions Background Information The Consumer Pr
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Project II Modeling Exponential Functions Background Information The Consumer Price Index (CPI) is a measure of the average change in prices over time in a market basket" of goods and services purchased either by urban wage earners and clerical workers or by all urban consumers. The all urban consumer group represents 87 percent of the total U.S. population and is based on the expenditures residents of urban or metropolitan areas, including professionals, the self-employed, the poor, the unemployed, and retired people, as well as urban wage earners and clerical workers (Source: U.S. Census Bureau, Statistical Abstract of the United States: 2011). The Producer Price Index (PPI) is a family of indexes that measures the average change over time in the selling prices received by domestic producers of goods and services. Imports are excluded. The target set of goods and services included in the PPI is the entire marketed output of U.S. producers. The set includes both goods and services purchased by other producers as inputs to their operations or as capital investment, as well as goods and services purchased by consumers either directly from the service producer or indirectly from a retailer. (Source: U.S. Census Bureau, Statistical Abstract of the United States: 2011). Purchasing Power of the dollar for selected years from 1950 to 2010 (Consumer Price Index and Producer Price Index). ed by- Consumer prices (CPI) Annual average as measur ucer prices (PPI 1980 1990 006 .600 .466 Project II- Modeling Exponential Functions MATH 1100: College Algebra 2 of 5Explanation / Answer
As CPI is the average change in the prices received by consumersover a period of time and PPI is the average change in prices received by producers over a period of time, so the PPI and CPI reach 0 when there is no changes in the prices over a period of time. The rate of inflation in that case is 0.
This can also happen when the value of dollars decline over a period of time at the same rate as the rise in price and thus irrespective of changes in price,the net change is 0 .As a result CPI, PPI and inflation come out to be 0.
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