Principles of Macroeconomics / Unit 6 MAC 0504 short lesson, about 20 seconds
Index Numbers
Captions available
The idea
An index restates the basket's cost so the base year equals one hundred. Divide each year's cost by the base year's and multiply by a hundred.
In practice
Index numbers carry no units and no dollar signs.
Where people slip
The base year is arbitrary and changing it changes no inflation rate, because the rate is a ratio between two years.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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