Fix the basket at 3 footballs and 4 basketballs.
Year
|
Price of Footballs
|
Price of Basketballs
|
Year 1
|
$10
|
$12
|
Year 2
|
12
|
15
|
Year 3
|
14
|
18
|
Compute the cost of the basket:
Cost in Year 1= $78
Cost in Year 2= $96
Cost in Year 3= $114
Using Year 1 as the base year, compute the index:
CPI in Year 1= 100
CPI in Year 2= 123.07
CPI in Year 3= 146.15
Compute the inflation rate:
Inflation rate for Year 2= 23.07%
Inflation rate for Year 3= 18.75%
Take a look at the following link. Notice all the different measures of a country's "Standard of Living." Which do you think is the best measure and why?
I prefer the median household income because this statistic gives an idea of how much money each household is bringing in, in a particular country. Shows how poor or rich the people in a country are that own a house compared to other countries around the world. In the chart from the link, some states in the U.S. are singled out, probably because of their high median household income, as a state alone, are as high as some countries. Connecticut having the most median household income and California is third.
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