"drawing board" on their website. Watch the following video and in your post you must do two things.
1) Come up with a legitimate higher order thinking question over material covered in the video.
2) Provide an answer to someone else's question that they posted. (In your answer be sure to list whose question it is you are answering.)
31 comments:
1. The Median CPI better than taking the Average CPI for the federal government long term/short term?
2. Mr. Pye's Question.
1. My "higher level" question: What should one do while looking at the medium CPI? Think about possible outliers and how they affect the general trend of the CPI "track record", so to speak.
2. Caleb's very confusing question: The average CIP number is often used to make cost of living adjustments and social security benefits, but it is not a good indication of tracking inflation from month to month. Thus, the median is better for the federal government short term, while the average CPI is better for long term.
1) What are some other potential examples of relative price change without exhibiting inflation?
2) In response to Andrew's question:
Although the median CPI uses the exact middle 'bee' to state the general direction of the economy, the outliers can significantly pull averages up or down. Thus, the RMSE, or root mean square error, could also be used to indicate the average direction of the entire 'swarm.'
1) What do you think would happen economically if the CPI is estimated significantly inaccurate?
2)In response to Sam's question:
Potential examples of price change without exhibiting inflation are changes in food prices due to natural events such as droughts, hurricanes, etc.
1)It seems the point of the CPI is not only to predict inflation, but to also regulate prices. Using Adam Smith's principle of the invisible hand, would this action be effective or not and why?
2)In response to Jonathon Cheung:
The CPI has already proven significantly inaccurate with its 25% more error than the newer version, but just as the first CPI helped in its time, other rules or ideas will also advance knowledge. It may be compared to science... though the first scientific ideas had a lot of inaccurate information, their basis provided a spring board for new, more accurate work. So, even though the work was not great, it helped the society in that time to get a general idea and work from there.
1. Economist always have a more technical way of figuring things out. Do you think there is a simpler way to predict inflation? If so what is it?
2. In response to Rachel's question:
I think the CPI trying to regulate prices is a good idea because it maintains a certain consistency for consumers, which is always a good thing. And the more consistent the prices are the more people will be willing to buy. The more people buy the better off the economy will be. But at the same time the CPI's interference with the economy would go against the theory of the invisible hand, so I guess I'd be ineffective.
1)If inflation is calculated with some form of accuracy what are the effects towards us( the consumer) ?
2) Anissia's question:I do not believe there is a way to acquire an inflation rate without being "technical " per say. Hence, for the time being the most simplest and easiest way to calculate the general movement or prices -inflation would be to use the median CPI because through that avenue an individual is able to see the movement of prices through the middle price, and is also 50% accurate compared to 25% core CPI which is 25%.
1) The video gives examples of why using the average CPI would be ineffective towards predicting inflation. Though the median CPI is 50% more accurate than the average CPI, what, if any, is an example that would cause the median CPI to also be ineffective in calculating inflation?
2) In response to Samuel's question:
Because inflation is calculated with "some" accuracy, we as consumers are unable to be 100% certain about inflation. Depending on how accurate a calculation is, our lack of certainty about inflation could either help or hurt us.
Sorry...I didn't mean to be anonymous...
1) The video gives examples of why using the average CPI would be ineffective towards predicting inflation. Though the median CPI is 50% more accurate than the average CPI, what, if any, is an example that would cause the median CPI to also be ineffective in calculating inflation?
2) In response to Samuel's question:
Because inflation is calculated with "some" accuracy, we as consumers are unable to be 100% certain about inflation. Depending on how accurate a calculation is, our lack of certainty about inflation could either help or hurt us.
1.Based on the topics discussed in the video, look over these statistics of the current median CPI and discuss your thoughts on the data. Relate it back to some of the points brought up in the video.
2. In response to Ala`n’s question: Even though, the median CPI may be more accurate than the overall CPI, it can possibly be faulty in the way it “predicts” the future inflation using their track record. As a result of wrong predictions, the Root Mean Squared Error can be interpreted or calculated wrong as well. Relying primarily on predictions is a very risky dealing.
**Forgot to put the link in the previous comment sorry!!**
1.Based on the topics discussed in the video, look over these statistics of the current median CPI and discuss your thoughts on the data. Relate it back to some of the points brought up in the video.
http://www.clevelandfed.org/research/data/us-inflation/mcpi.cfm
2. In response to Ala`n’s question: Even though, the median CPI may be more accurate than the overall CPI, it can possibly be faulty in the way it “predicts” the future inflation using their track record. As a result of wrong predictions, the Root Mean Squared Error can be interpreted or calculated wrong as well. Relying primarily on predictions is a very risky dealing.
1) What are some instances where the average CPI would be more useful than the median CPI?
2)Anissia: I think any simpler ways of predicting inflation would likely be much too inaccurate to be useful. The current method of calculating median CPI is a simple and effective way of seeing the general trends of inflation.
1) which factor in the current formula of calculating the CPI could be changed that would generate more accurate data?
2) in response to Samuels question: depending on the accuracy of the results of the calculations, consumers can plan ways to reduce the inflation
1. Because of the huge price swings on food and energy we don't use them while calculating CPI, because we don't/can't calculate the inflation of these items does it have an effect on the calculated CPI and if so how detrimental of an effect does it have on the CPI?
2.In response to Jibin Kuzhippil:
I'm not sure if this formula can be improved but in my personal opinion I believe that medicine should be treated just like how food and energy is when CPI is calculated. I say this because their are many outside factors that increase the demand of medicine. For example, if an outbreak of something occurs or if a natural disaster occurs all of the injured are going to need antibiotics.
1. If the median CPI is more accurate for inflation in the future then why do economists take into account the average CPI for other things?
2. Donovan's question: Yes, not calculating certain items in circulation does effect the CPI. We don't count the products that change rapidly, but those products can also be ones that are used constantly through consumers. Not calculating the CPI of these items returns with an inaccurate account of the future CPI.
1. What are some of the biases that the GDP uses to overstate inflation?
2. Answer to Anissia's question: I do not think that there is any simple way of calculating inflation without having miscalculations and other errors. We should just stick with the same formula.
1. Would taking out food and energy in the core CPI be similar compared to the median CPI which looks only at the middle values?
2. In response to Samuel's question:
Inflation can be calculated with some accuracy and the video describes the benefits being stable price and full employment.
1. In the video it is stated that the median and the core CPI is better at predicting inflation than the overall CPI, the changes they made simple and logical. So how would it be possible to increase the accuracy from there?
2.In response to Jonathan Cheung:
If the CPI was to be calculated inaccurately there would be some drastic changes in prices that does not allow for balance, however it will not make much of a drastic change in the overall economy.
1) What are some ways we can prevent inflation other than what's been mentioned?
2) In response to Anissia's question:
I don't think there would be another way to calculate inflation,and even if there was another way it could only add on more errors in the calculation.
1)Does the CPI reflect your spending habits or experience with price change?
2)In response to Delma's question:
You could....
- Tie the creation of money to the creation of Stuff.
-Reduce the governments spending to stop new money from entering the system.
-Sell bonds to remove money from the system. Or make it more expensive for Banks to borrow money, which causes them to raise their interest rates, which has the same effect as selling bonds.
1. Would looking at the median of the entire list of price changes create a more tremendous inaccuracy because of the generalization being made to the rest of the goods?
2. Response to Delma Mathew's question: The government could utilize their ability and put taxes on certain goods that are being imported so that there will not be a huge excess demand for that one good. Also what could take place is that the flow of money from the reserves can slow down which all in all will either lower the prices of goods or keep them constant due to the fact that no more money is being put into circulation
1) My Question: In reference to the "Bees in a swarm" analogy, if the size of the bee is a representation of its relevance and importance in comparison to that of the other bees and the direction that the bee is moving in is linked to its monetary value, what would be an example (in a real economy)of a smaller bee flying south growing in size and changing direction?
2)In response to Kate's question:Economists most likely take into account the average CPI to obtain a general idea of where the CPI is on average so that when obtaining the median CPI they can calculate the relevance between the two.
1) Is using the median really the most accurate means of measuring inflation?
2) In response to Cameron's question:
No because the generalizations are the most accurate data that we can come up with.
Why is relative price change considered better than inflation when in both cases the prices are increasing?
Annisia: Inflation could be foreseen when there is a decrease in production and availability of multiple products in the market.
1)The median CPI is generally more accurate in measuring the overall trend. However, Should the average CPI and other methods of measuring spread be used to consider when making predictions? Why or why not?
2)In response to Josh: Yes. The Median measures the spread in the most consistent fashion, therefore, it can be assumed to be the most reliable.
Question: Does the fact that the median CPI is apparently 50% more accurate in gauging future inflation versus the current CPI make you believe that the U.S. should switch to the median CPI?
Answer to Josh's question: I believe it would be a good idea to switch to the median CPI because it shows a general trend of items in the market instead of having to value each item separately.
1. Do you think there is any way to predict or prevent price swings/jumps so that the CPI would be a more valid source when representing inflation within an economy?
2. In response to Nidhin Sam's question: Due to the pure statistical standpoint, it does sway me to believe that the U.S. should switch to the median CPI. However, my extent of knowledge on this topic is only coming from a chapter in my textbook, and the 8 minute YouTube video I watched, so I in no way know what’s best for our country.
My Question:
Why does the Bureau of Labor Statistics weight different items included in the measure of the consumer price index?
Answer to katherine's question:
No i really don't think so
1) How can a more accurate measure of CPI affect us, the consumers?
2) In response to Josh's question: Yes, it gives a good general direction of the market, and is implicitly much more stable and reliable.
1)explain in detail the difference between CPI and median CPI
2)In response to Mebin's question "How can a more accurate measure of CPI affect us, the consumers", As he mentioned in the video, if we can engaged inflation with some degree of accuracy. The federal reserve will have a better chance to adjust policy, which benefit us by moving toward stable prices and full employment.
Compact size in handheld microscopes. Parts of the Microscope. Healthy Hint: This is just a tiny suggestion .
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