Answer to Question #92311 in Macroeconomics for Unknown287159

Question

1. Explain how the inflation rate ,that is usually reported every month in the media, is obtained. Use hypothetical figures for calculations.

Answer 1

The rate of inflation is measured depending with the previous cost of goods. It is a quantitative measure. For example, in 2014, $1 had about the same purchasing power in overall terms of goods and services as 18 cents did in 1972, because of the amount of inflation that has occurred over that time period.