Unemployment imposes costs on individuals and nations.
Unexpected inflation imposes costs on many people and benefits some others because it arbitrarily redistributes purchasing power. By creating uncertainty about future prices, inflation can reduce the rate of growth of a nation's standard of living. The purposes of today's lesson is to practice the calculation of one of our most important macroeconomic indicators, a price index. Your ability to feel comfortable with these calculations will enable you to apply this knowledge to real world applications of the relativity of price changes over time. As an added bonus, given the time of year, we have selected products in our market basket that are reflective of what some who celebrate either a Christian ritual or a Jewish ritual at holiday time would purchase.