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Essay / Research Paper Abstract
This 3-page paper is a discussion about the Consumer Price Index, its purpose, and the pros and cons of using this to measure inflation. Bibliography lists 3 sources.
Page Count:
3 pages (~225 words per page)
File: D0_MTcipove.rtf
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Unformatted sample text from the term paper:
to help measure the effectiveness of the economy. Basically, the CPI takes into account how much people earn, and how much those earnings are spent in goods and services. If
the CPI goes up appreciably, government-funded salaries, such as Social Security or Medicare, also go up accordingly. Basically, the CPI is also
the monitor for inflation, if it goes up too high, then we need to worry, as it likely shows that more money is out there chasing fewer goods (which is
the principle definition of inflation). The CPI was launched during World War I -- at that time, increases in prices required that
an index be invented to calculate cost-of-living adjustments in wages (U.S. Department of Labor, Bureau of Labor Statistics, 2004). The first index was calculated by studying family expenditures in 92
industrial centers between 1917 and 1919 -- and in 1919, the BLS began publishing separate indexes for 32 cities (U.S. Department of Labor, Bureau of Labor Statistics, 2004). The regular
publication of the national index (the U.S. city average) was launched in 1921, with indexes estimated back to 1913 (U.S. Department of Labor, Bureau of Labor Statistics, 2004). Since the
inception of the CPI, it has been comprehensively revised on six different times to take into consideration updated samples and weights, as well as expanded methodologies and coverage (U.S.
Department of Labor, Bureau of Labor Statistics, 2004). According to the BLS, these revisions help address criticisms of the CPI and help make it more valuable for calculations (U.S. Department
of Labor, Bureau of Labor Statistics, 2004). These days, the BLS issues a monthly version of the CPI, based on the results
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