Answer to Question #92534 in Macroeconomics for Aldah

Question

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 reported by the media is measured depending with the previous cost of goods. Inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over a period of time. It is the constant rise in the general level of prices where a unit of currency buys less than it did in prior periods. 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.