Changes

The '''Consumer Price Index''' is the government's gauge of inflation. It is used, for example, to adjust tax brackets and social security payments for inflation. To find it, the [[Bureau of Labor Statistics]] checks the prices of items in a fixed representative ''market basket'' of hundreds of goods and services used by typical consumer in a base year. The CPI is calculated as:

The '''Consumer Price Index''' is the government's gauge of [[inflation]]. It is used, for example, to adjust tax brackets and social security payments for inflation. To find it, the [[Bureau of Labor Statistics]] checks the prices of items in a fixed representative ''market basket'' of hundreds of goods and services used by typical consumer in a base year. The CPI is calculated as:

<math>CPI= \frac {\sum (Base~year~quantity \times Current~year~price)~for~each~item}{\sum (Base~year~quantity \times Base~year~price)~for~each~item} \times 100</math>

<math>CPI= \frac {\sum (Base~year~quantity \times Current~year~price)~for~each~item}{\sum (Base~year~quantity \times Base~year~price)~for~each~item} \times 100</math>

<math>Inflation~between~years~Y~and~Z= \Bigg[ \frac {CPI~in~year~Z}{CPI~in~year~Y}-1\Bigg] \times 100</math>

<math>Inflation~between~years~Y~and~Z= \Bigg[ \frac {CPI~in~year~Z}{CPI~in~year~Y}-1\Bigg] \times 100</math>

And any year's nominal GDP (or any other nominal figure) can be converted into real base year dollars using the following formula:

And any year's nominal [[GDP]] (or any other nominal figure) can be converted into real base year dollars using the following formula:

<math>Real~GDP= \frac {Nominal~GDP}{CPI~for~the~same~year~as~the~nominal~figure}\times 100</math>

<math>Real~GDP= \frac {Nominal~GDP}{CPI~for~the~same~year~as~the~nominal~figure}\times 100</math>