Answer to Question #146233 in Macroeconomics for Lutendo Thend

Question

Explain how the inflation rate, that is usually reported every month in the media, is obtained.2

Answer 1

Inflation rate that is usually reported every month by media is based on Consumer Price Index, the CPI calculate the cost to purchase of a fixed backet of goods, as a way of determining how much inflation is occurring in the broad economy. The CPI uses a base year and indexes the current year's prices according to the base year's values.