25-30 word response to classmate asking a question to their discussion

Aug 31st, 2015
Art Design
Price: $5 USD

Question description

Consumer Price Index (CPI) has a goal of measuring the changes in the price of living. “The consumer price index tries to gauge how much incomes must rise to maintain a constant standard of living.” (Mankiw, 2015). There are 5 steps to measuring the CPI :

1. Fix the Basket

2. Find the Prices

3. Compute the Basket’s Cost

4. Choose a base year

5. Computer the Inflation

CPI must calculate the inflation rate to be able to measure an accurate cost of living. CPI does not include increases in prices, because it is based off fixed prices.


Prices and incomes are slowly rising as the years pass, and it is important to take this into consideration when measuring price of living. A president that earned a $75,000 salary in the 1930s would average to make over 1 million today. Even though $75,000 is quite a bit lower than today’s pay, it was a high pay back in those days. Products were cheaper than today’s as well, so $75,000 went further than it would in today’s economy. Real interest rate is the difference between nominal interest rate and inflation rate. Nominal interest rate measures the rates excluding inflation, while real interest rate includes inflation within its measuring.


Mankiw, N. (2015). Principles of Macroeconomics, 7e, 7th Edition. [VitalSource Bookshelf version]. Retrieved from

Tutor Answer

(Top Tutor) Abdul Muqeet
School: Carnegie Mellon University

Studypool has helped 1,244,100 students

Review from student
" Wow this is really good.... didn't expect it. Sweet!!!! "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1821 tutors are online

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors