Consumer Price Index
Consumer Price Index
Introduction and Alignment
Managers need to understand the impact of the macroeconomic environment on their firms’ and industries’ competitive strategies. In the larger macroeconomic environment, influencing measures include the overall level of income and output produced in the economy, the price level, and the level of employment and unemployment. The latter factors are affected by the spending decisions of individuals and organizations throughout the economy. Thus, macroeconomic analysis focuses on the aggregate behavior of different sectors of the economy.
Upon completion of this assignment, you should be able to:
Identify the major measures of macroeconomic activity.
Resources
Textbook: Economics for Managers
Background Information
Many variables influence the major macroeconomic goals of policy makers. Many of these policies and changes affect macro events that influence managerial and business-specific decision making. These changes can include measures of the price level and the levels of employment and unemployment. This circular flow of economic activity forms the basis for the analysis of the macroeconomic environment in which managers operate. Inflationary pressures and indicators are measured by the Bureau of Labor Statistics (BLS) and can affect short- and long-term business investment and decision-making strategies.
Instructions
Before beginning this assignment, read Chapter 11 in Economics for Managers.
Navigate to the threaded discussion and respond to the following:
From the Bureau of Labor Statistics website (http://www.bls.gov/cpi/), find the answers to the following questions:
How is the consumer price index (CPI) used?
How is the CPI market basket determined?
What goods and services does the CPI cover?
How are CPI prices collected and reviewed?
How can the CPI help businesses manage costs?
Your initial post is due by the end of the fourth day of the workshop.
Read and respond to at least two of your classmates’ postings, as well as all instructor follow-up questions directed to you, by the end of the workshop.
Your postings should also:
Be well developed by providing clear answers with evidence of critical thinking.
Add greater depth to the discussion by introducing new ideas.
Provide clarification to classmates’ questions and provide insight into the discussion.
Solution Preview
1. How is the consumer price index (CPI) used?
Consumer Price Index is the measurement of changes taking place in the price level of the market basket of consumer goods and services purchased by the households. The CPI is extensively used as an economic indicator, to measure the inflation level and the effectiveness of the government’s economic policy. It enables the government, businesses and citizens to monitor and have an idea about the price fluctuations taking place in the economy;
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