"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.)
My Question #1 "What makes the Median CPI a better indicator of inflation trends than the CPI? "
Consumer Price Index
38 comments:
1) What does the Median CPI do that benefits us (the people)?
2) Mr.Pye's Question: What makes the Median CPI a better indicator of inflation trends than the CPI? The CPI takes all the price changes, adds them up, and then divides it by the number of items giving the average change. This isn't inflation because a certain price change in one item( for example: rent) can affect the entire average. That substantial change in one item is known as a relative price change. On the other hand, the Median CPI takes the middle value (the median) and uses it. This shows the "general movement of prices" which is what inflation is.
1. What are the differences between CPI and Median CPI? What benefits do each individually offer?
2. Answering Mayur Patel'squestion: Median CPI is abour 50% more accurate at gauging inflation than regular CPI and 25% more accurate than the Core CPI. Median CPI helps us, the people, by helping us move towards stable prices and full employment.
1. What are some other preventative ways we can stop or reduce inflation?
2. Answering Britney’s question. What are the differences between CPI and Median CPI? What benefits do each individually offer?
The main differences between CPI and Median CPI is that CPI measures changes in the price level of consumer goods and services purchased and the BLS averages them, while Median CPI takes the median price in a long list of price changes. CPI offers a measure of the average change over time in prices and Median CPI offers a fix for price swings.
1. What are some problems with using the Median CPI as compared to the regular CPI?
2. Mayur Patel's question:The Median CPI better shows inflation during a short time period as compared to the regular CPI. The Median CPI can help people see if inflation is occurring and act accordingly before it is too late.
1. What are some positive aspects of the CPI?
2. Answering Logan Well's question........well a country's government can force the economy to be smaller to reduce their GDP, they can also reduce government spending, etc.
Alexis Buck.
My Question: Why is calculating the median for the consumer price index more accurate than just simply taking the average? And why is it important to figure out the inflation in our country (like is in how is knowing the inflation rate affect other such decisions we make, and what inflation in general impacts.)?
Answering Mayur Patels Question of "What does the Median CPI do that benefits us (the people)?":
Based on what I picked up in the video, the Median CPI is a more accurate calculations of the inflation rate because of how the regular CPI average is heavily weighed on items that may not be totally affected by inflation (as in the prices just rise and fall due to our tastes, preferences etc.) which brings the CPI lower than what it should be. With Median CPI, it is more accurate because it focuses on the inflation based on the prices towards the middle that are going in the same direction as most of the other prices, and aren't as skewed because of the prices that are based on things other than inflation. Knowing the median CPI helps us avoid decreases in consumer spending, helps reach more stable pricing ranges, and helps us strive for a better GDP output, and full employment. Yahhh.
Question: Is inflation good for the economy in some ways? If so, what makes it good? Bad?
Answering Mayur Patel's Question: Median CPI helps the people by allowing us to have a mre accurate idea of the effects of inflation. With regular CPI, we do not know how accurate the inflatkion rate is for some items, as not all consumables inflate at the same rate. However, median CPI doesnt take into account the extremes of inflation by either large inflation or minimal inflation compared to the average inflation rate.
1) How accurately do you think the "army of price checkers" of the BLS (Bureau of Labor Statistics) is when determining the overall change in prices? Can they account for all "things" typical consumers buy, including the things that you and I would buy?
2) Mr. Pye's question: The Median CPI is a better indicator than the CPI itself because all of the fluctuations of prices affects the CPI on a large scale. The individual prices of certain resources, such as that of food and petroleum, can experience much change so as to make the CPI a bad indicator of inflation trends. The drastic changes in a single resource or product, by using the CPI instead of the median CPI, will suggest an inflation/deflation of the overall economy when in fact no change has in fact happened. Therefore, the median CPI, by only taking into consideration the median price change, results in an overall more accurate trend progression. The median CPI represents the prevailing mobility of the prices of the grouping of resources designated by the Bureau of Labor Statistics. The general trend of prices is the only reasonable indication of possible inflation.
1.) In what ways does knowing the inflation trends benefit a regular person? A business man? A rich entrepreneur?
2.) Answering Mayur Patel's question: What does the Median CPI do that benefits us (the people)?
Median CPI benefit the people by keeping them more informed about the actual inflation trends. If one pays attention to only CPI, then the inflation values could be skewed due to extreme shifts in certain good, which would not reflect a change in the overall market.
1. How do you think the economy would be affected if there was no calculation of CPI and if economist did not keep track of inflation
2. Answering Logan wells question: As long as consumers spending more money and the government keeps the amount of money in circulation the same, inflation will not increase. This is theoretical of course
1. What are some of the limitations of CPI in comparison to those of Median CPI?
2. To answer Josh Ortiz's question, inflation can be positive on a more individual scale. Inflation may positively impact the inflators. It also has a positive impact on those who have borrowed money that they now need to repay.
1. Why does the Median CPI paint a more accurate picture than the traditional CPI?
2. To answer Savannah Milligan's question, the limitations of CPI is very obvious in comparison to the Median CPI. In CPI, since its the average of changes of prices one product that's an outlier can potentially swing the overall change in prices way up or down. The median CPI on the other hand accurately depicts the general direction of prices.
1. How do they determine the weighting of the various items in the CPI?
2. Answering Mr. Pye's Question: One spike in prices skews the results in the regular CPI and the Median CPI shows a better overall view of the general movement of prices/inflation.
1) Why might it seem like a good idea to exclude certain volatile items from CPI calculations?
2)In response to Dana Rodriguez: The BLS determines the weighting of each item in the CPI calculation according to the percentage of income devoted to each particular item in relation to the others.
1. Compare and Contrast CPI and Median CPI including the advantages and disadvantages of both.
2. Answering Ann Johnson's question: Advantages of CPI include covering the spending of the majority of American population as well as what the average American purchases on a day to day basis.
1. Why is it vital to not account for price swings when using CPI to measure inflation?
2. Answering to Brandon May's question: It is a good idea to exclude volatile items due to the fact that it leads to price swings that has nothing to do with inflation.
1. Would you trust the Median CPI considering that it is a less studied measure of CPI compared to using the mean?
2. Savannah Milligan's question:
What are some of the limitations of CPI in comparison to those of Median CPI?
CPI has the potential to drastically shift the population's perception of inflation, such as if only rent or fuel prices take a dramatic shift. On the other hand, Median CPI could potentially under-stress the effects of inflation on the economy
1. What constitutes a "heavy bee" in the metaphor they used? What characteristics of that product cause it to be more important to the equation, and does that mean the price checkers may pay more attention to them as opposed to items that affect it less?
Answering Beth Sutton's question:
Would you trust the Median CPI considering that it is a less studied measure of CPI compared to using the mean?
Although it is a less studied measure of CPI, median is not affected by outliers as mean is, and therefore it will give a more accurate statement to what the true middle price is. Essentially, even if there are items that are worth exponentially more in the equation than the majority of objects, or objects that are worth so little they might as well not be there, the median will still be able to find an accurate middle, as opposed to the mean, which will greatly change to even one outstanding outlier. As such, it is better to trust the median number, even if it has not been tested as thoroughly.
What does CPI stand for? I'm just playing. Is the CPI the best measure of inflation?
Answering to my bro Josh Ortiz's question: In reality, inflation can benefit the economy in some ways. In fact, if the inflation rate is too low, economic growth decreases as well. MIND BLOWING!
1) How can we take advantage of the supposed benefits of using the Median CPI?
2)To answer Gregory Hsiao's question, the term inflation suggests a general rise in the prices of goods and products. The CPI, however, falsely suggests inflation if one specific product's prices increase due to increased demand. We want the general trend, not one specific for one product.
1. what limiting factors are associated with cpi?
2. Jacob's question: Meidan cpi excludes volatile items that have nothing to do with inflation. Cpi does not exclude these items which can account for fluctuations that have nothing to do with inflation.
1. How are items chosen for use in CPI at all? What standards must be met to be included?
2. Responding to Albert Wangsta's question (and related to my question): The items chosen to represent an average may not be representative of everybody. The very poor will purchase different items than the very rich while using much less money, so a compromise must be made between closer representation of either the population, or the entire economy.
1. Because each calculation contains particular strong and weak-suits, would it be feasible to create a formula that best adheres to both the CPI and the Median CPI in order to better compare and contrast both formulas for deeper analysis on inflation and the status of GDP?
2. Answering Trevor's question:
The BLS determines which goods/services are on the CPI list by weighting each item based on the percentage of income devoted to each particular good/service in relation to the others throughout the market. Standards vary because each item has a different amount of devotion given to it and thus resulting in why some items are weighted as very light items while others as significantly heavier items.
Which aspects of the economy does CPI account for? Which aspects does CPI not account for?
Answering to josh Ortiz's question: inflation could be good for those who contemplated on buying a certain good but were scared to take the risk. Inflation helps to push the buyer towards purchasing by reducing the risks. If that makes sense..,
1) Should the average CPI and other methods of measuring be used to consider when making predictions? Why or why not?
2)In response to Seena's question, the CPI measures changes in the price level of consumer goods and services purchased by households. Whereas, the medium CPI focuses on the inflation based on the prices towards the middle that are going in the same direction as most of the other prices, and aren't as skewed because of the prices that are based on things other than inflation. What remains advantageous about Medium CPI is that it takes into account a fix for price swings,considering CPI offers a measure of the average change over time in prices.
1)Why do you think the BLS continues to use the CPI even though the Median CPI has been proven to be more accurate when gauging inflation?
2)To answer Albert's question: A limiting factor of CPI is that if the price of one good increases substantially, the CPI goes up. However, the increase in the price level of one good is not considered inflation. Therefore, if in a short amount of time, the price of a good increases or decreases substantially the CPI measures this as inflation however, this is an inaccurate prediction. CPI does not account for the rapid increase or decrease in the price level of one certain product.
1) When using the medium CPI, could somebody use the evaluation to better predict the evaluation for a specific stock?
2)Answering Jay Shay's Question-In what ways does knowing the inflation trends benefit a regular person? A business man? A rich entrepreneur?
It helps the average man by indicating the rate of inflation in a better way because it gives the person the average amount that they would expect prices to go up or down. For instance, the John and Sally Doe want to buy a house, they could use this method, barring any major changes, to evaluate the cost of living over x amount of years. The business man could use this to calculate the average amount of profits needed each month to buy products to make his business more efficient. Warren Buffet could use this to better calculate the profitability in the investments he has tied up.
Is CPI an accurate measurement of inflation in our society?
Answering Seena's question:
CPI is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care.It is a reasonably large marketbasket of goods and service, and It's measurable. The disadvantage is that is changes over time.
Median CPI is a measure of underlying inflation trends.
What are some limitations of the CPI?
Answering Anna Punnoose's question: Is CPI an accurate measurement of inflation in our society?
CPI will of course have its missteps, but compared to other indexes (PPI, etc.) it really is the best measure of inflation for the intended use of the data. The intent is to allow consumers to purchase a market of goods, particularly basket goods, and services similarly equivalent to the market they might’ve purchased goods in, in an earlier period. CPI is also most commonly used to translate retail sales and hourly or weekly earnings into inflation-free dollars.
1. How is the CPI market basket determined?
2. Answering Jackie's question the CPI is subject to both limitations in application and limitations in measurement. The CPI may not be applicable to all population groups. For example, the CPI-U is designed to measure inflation for the U.S. urban population and thus may not accurately reflect the experience of people living in rural areas. The CPI cannot be used to measure differences in price levels or living costs between one place and another; it measures only time-to-time changes in each place. The CPI is subject to sampling and non-sampling errors.
1) Why is calculating median CPI important to society?
2) Answer to Brittany Kuusisto's Question: What are the differences between CPI and Median CPI? What benefits do each individually offer?
The difference between median CPI and CPI is that Median CPI takes the median of a list of price changes while CPI measures changes in price levels in consumer goods and services. The median CPI helps the government to adjust policies to move toward full employment. CPI helps us see the changes that are made over time.
1) Is median CPI an more accurate measurement than regular CPI? Why or why not?
2) Answer to Albert Wang's question: onsumers tend to shift their consumption away from the more expensive products and substitute cheaper products. Because the CPI uses a fixed basket of goods, it will assume people are still buying the same amount of the relatively expensive products. In reality, however, they are buying less of the expensive products. So their overall expenses are not as large as the CPI suggests.
1. Why are food and energy prices not included in the CPI, what is different about affects on these prices and other goods?
2. Answering Trevor's question, the bureau of Labor Services determines what goods meet the requirements to be included in the CPI. IT must be bought by the average American (ex. Rent, and jewelry), and its price must not be affected by random events such as a hurricane destroying the majority of supply of a product.
1. How does CPI affect the overall economy and how can we, the people, improve it?
2. Median CPI makes a better indicator of inflation trends than CPI because relates all price changes and then divides it by the number of items to give an average. Price change is very important for CPI.
1. Why is CPI so important in a nation, what does it allow a nation to figure out about themselves, what changes can be made from understanding CPI, what are its limitations and its advantages?
Answering Adam pyes question
The prices of energy and food could change rapidly which is the reason why they are not included in CPI. The difference of the prices is that they change rapidly when compared to others like clothing prices.
1) Why has CPI been used traditionally over Median CPI
2)Answering Brittany's question, the difference between normal CPI and the Median CPI discussed in the video is that while CPI measures the change in the average price level of consumer goods, Median CPI look at the middle of a lot of goods, prividing the advantage of an awareness of whether a change is a price swing or actual inflation.
1. What are the ebnefits of using median CPI as a standard of measurement?
2. Answer to Bradley's question: CPI has been used because it is a very representative value for the overall change in price for a certain type of good. While being very representative, it also takes into account cost of living, social security, and taxes so that the most accurate value possible is provided.
saira sultan pd.3
what are the affects of inflation on the economy, both good and bad?
answer to sidney okon question, cpi measures the average change in the prices paid for a market which gives us a number to rely on rather than a set of different numbers.
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