What you’ll learn to do: explain the concept of a price index and explain how price indices are derived

In this section, you will learn about the basics behind price indexes and how to calculate the general price of a good or service while accounting for the rate of inflation and changes in costs and prices.

The specific things you’ll learn in this section include:

• Define the consumer price index and the producer price index
• Calculate a price index number given a basket of goods & services and the nominal price of each in a base year and at some later time

LEARNING ACTIVITIES

The learning activities for this section include:

• Reading: Price Indexes
• Self Check: Price Indexes
• Reading: The CPI and PCE
• Reading: How Changes in the Cost of Living are Measured
• Self Check: Consumer Price Index vs. Producer Price Index
• Reading: Tracking Inflation
• Self Check: Calculating Price Indexes

Take time to review and reflect on each of these activities in order to improve your performance on the assessment for this section.