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by tomrod
51 days ago
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Basket goods, basically. Price of good i x Quantity of good i. Quantity is fixed year to year. So a loaf of bread, a gallon of milk, a TV, etc. Sum those up across a reasonably representative basket, then compare that sum to the same quantity and new prices in a future year. sum(P_i_new year x Q_i) / sum(P_i base year x Q_i) - 1 --> change in CPI Hamburgers might be more expensive, but TVs, toilet paper, and dog kibble might not be. |
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