23 The CPI and the Cost of Living

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Chapter Checklist

When you have completed your study of this chapter, you will be able to

  1. 1 Explain what the Consumer Price Index (CPI) is and how it is calculated.

  2. 2 Explain the limitations of the CPI and describe other measures of the price level.

  3. 3 Adjust money values for inflation and calculate real wage rates and real interest rates.

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