Inflation and Analyses of Monetary Policies

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Economics

Description

This assignment will introduce students to the U.S. Department of Labor's Bureau of Labor Statistics (BLS) data and provide students with the skills to calculate inflation and interpret the Consumer Price Index (CPI). Note: The BLS is the primary source of information on inflation, but their data is re-posted in other sources, such as the St. Louis Federal Reserve FRED site, among others.

Assignment Steps

Resources: Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products.

Use an internet search or the University Library to locate information on the Consumer Price Index (CPI). Internet sites you might find useful include the Bureau of Labor Statistics (BLS) and the Federal Reserve of St. Louis FRED web site although you are allowed to use other sources.

Develop a minimum 700-word analysis of inflation by including the following:

  • Choose a product or service you currently consume/use, such as apparel or educational services, that is included in the CPI's "market basket." Find the annual CPI index numbers for your chosen good or service for the years 1995, 2005, 2010, and 2015. Enter those index numbers in an Excel® file and calculate the percent change (inflation rates) in those index numbers from 1995 to 2005, from 1995 to 2010, and from 1995 to 2015.
  • Analyze the trends in overall inflation over the last five years and whether your income has kept pace with inflation. How has inflation over the last five years affected you and/or your family?
  • Discuss how a business manager, such as a human resources manager, might use CPI statistics.

Cite a minimum of three scholarly, peer-reviewed references.

Format your paper consistent with APA guidelines.

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Explanation & Answer

Attached.

Running Head: ANALYSIS OF INFLATION

1

Analysis of Inflation
Student’s Name
Institution of Affiliation
Course
Date

ANALYSIS OF INFLATION

2

CPI of Consumer Basket Commodities
Consumer Price Index is the weighted average change in the prices paid for a basket of
commodities over a given period. Over the past 20 years, the consumer price index has
experienced a decreasing trend in many consumer goods. Foods and Beverages, for instances,
have recorded a CPI of 243.98, 243.89, 244.76, 244.96, and 243.98 for the years 1995 to 2005,
from 1995 to 2010, and from 1995 to 2015. Prices have been slightly lower in some years, with
the consumer products experiencing annual deflation. However, growing deflationary forces
were experienced more in 2010 when the prices of gas began to fall to the normal level (St.
Louis Federal Reserve FRED, 2017). This resulted in a whole year with prices of the consumer
product lower than the consumer price index. The year 2009 had a high rate of deflation due to
the very low prices of the consumer product as was the case in the previous year. The low rate of
inflation benefited many consumers because they could now afford to buy the consumer products
at a lower price (U.S. Department of Labor's Bureau of Labor Statistics, 2017). The recent CPI
reports a 2.1% increase in the overall costs of a basket of consumer goods and services that was
far much higher than what was reported in the previous years.
Year Jan Feb Mar Apr May Jun J...


Anonymous
I was having a hard time with this subject, and this was a great help.

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