a single number that summarizes all prices in an economy; price indices are frequently used to represent the aggregate price level. a measure that calculates the changing cost of purchasing a particular (and unchanging) combination of goods (called a “market basket”) each year; the consumer price index and the producer price index are examples.
How much does Britannica premium cost?
Get Britannica Premium for only $24.95 - a 67% discount! Whether or not a failure to make sufficient allowance for improvements in the quality of goods causes most price indexes to be biased upward is a matter of dispute.
How can we make price comparisons between two periods?
One way would be to make price comparisons between two periods solely in terms of goods that are identical in both periods. If one systematically deletes goods that change in quality, the price index will tend to be biased upward if quality is improving on the average and downward if it is deteriorating on the average.
What is a sustained increase in the price level?
a sustained increase in the overall price level in the economy, which reduces the purchasing power of a dollar the pace at which the overall price level is increasing; this is the percentage increase in the price level from one period to the next.
